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Hierarchy and the power-law income distribution tail

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  • Blair Fix

    (York University)

Abstract

What explains the power-law distribution of top incomes? This paper tests the hypothesis that it is firm hierarchy that creates the power-law income distribution tail. Using the available case-study evidence on firm hierarchy, I create the first large-scale simulation of the hierarchical structure of the US private sector. Although not tuned to do so, this model reproduces the power-law scaling of top US incomes. I show that this is purely an effect of firm hierarchy. This raises the possibility that the ubiquity of power-law income distribution tails is due to the ubiquity of hierarchical organization in human societies.

Suggested Citation

  • Blair Fix, 2018. "Hierarchy and the power-law income distribution tail," Journal of Computational Social Science, Springer, vol. 1(2), pages 471-491, September.
    • Handle: RePEc:spr:jcsosc:v:1:y:2018:i:2:d:10.1007_s42001-018-0019-8
    DOI: 10.1007/s42001-018-0019-8
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    Cited by:

    1. Fix, Blair, 2020. "Economic Development and the Death of the Free Market," Working Papers on Capital as Power 2020/01, Capital As Power - Toward a New Cosmology of Capitalism.
    2. Fix, Blair, 2020. "Economic Development and the Death of the Free Market," SocArXiv g86am, Center for Open Science.
    3. Blair Fix, 2022. "Economic development and the death of the free market," Evolutionary and Institutional Economics Review, Springer, vol. 19(1), pages 1-46, April.
    4. Fix, Blair, 2021. "Redistributing Income Through Hierarchy," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, issue 98, pages 58-86.
    5. Blair Fix, 2019. "Energy, hierarchy and the origin of inequality," PLOS ONE, Public Library of Science, vol. 14(4), pages 1-32, April.
    6. Blair Fix, 2021. "How the rich are different: hierarchical power as the basis of income size and class," Journal of Computational Social Science, Springer, vol. 4(2), pages 403-454, November.
    7. Fix, Blair, 2021. "The Rise of Human Capital Theory," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, issue 95, pages 29-41.
    8. Fix, Blair, 2019. "Energy, Hierarchy and the Origin of Inequality," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 14(4, April), pages 1-32.

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