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Wealth and Income Distribution among Heterogeneous Households in a Neoclassical Growth Model with One Capital and Multiple Consumer Goods

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  • Wei-Bin Zhang

Abstract

This paper brings heterogeneous households and heterogeneous sectors in the traditional Solow-Uzawa neoclassical growth model. It is influenced by the neoclassical growth theory and the post-Keynesian theory of growth and distribution. The model deals with not only the economic structure, but also income and wealth distributions between heterogeneous households. We show the transitional paths of the variables and determine the economic equilibrium for a two-group and two-sector economy. We also conduct out comparative dynamic analysis with regard to human capital, propensity to save, and population size. We demonstrate, for instance, that rises in the skilled and unskilled groups’ the propensities to save have the same impacts on the national and sectoral production levels, input factor distributions, rate of interest, wage rate, and national wealth; but the skilled (unskilled) group’s wealth and consumption level are reduced (increased) and the wealth and consumption gaps between the two groups are diminished (enlarged) as a long-term consequence of a rise in the unskilled (skilled) group’s propensity to save.

Suggested Citation

  • Wei-Bin Zhang, 2014. "Wealth and Income Distribution among Heterogeneous Households in a Neoclassical Growth Model with One Capital and Multiple Consumer Goods," Economic Studies journal, Bulgarian Academy of Sciences - Economic Research Institute, issue 1, pages 48-61.
    • Handle: RePEc:bas:econst:y:2014:i:1:p:48-61
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    More about this item

    JEL classification:

    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models
    • E25 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Aggregate Factor Income Distribution

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