Wealth Distribution, Elasticity of Substitution and Piketty: An ‘Anti‐Dual’ Pasinetti Economy

Zamparelli, Luca

doi:10.1111/meca.12157

Cited by 21 publications

(24 citation statements)

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“…The right panel of Figure 3 displays the dynamic trajectories corresponding to a shock to the institutional parameter z. Zamparelli (2016) has shown that in an "anti-dual" Pasinetti economy, tax policy can be used in order to implement any wealth distribution among the two classes. Following his contribution, suppose that capitalist incomes are taxed proportionally at a rate τ , while the tax proceedings are rebated to workers in the form of subsidies.…”

Section: Institutional Change and Secular Stagnationmentioning

confidence: 99%

“…This equilibrium requires a savings rate on behalf of workers which exceeds the savings rate of capitalists. On the other hand, Zamparelli (2016) demonstrates the existence of an "anti-dual"…”

Section: Introductionmentioning

confidence: 99%

“…Kumar (2016) finds that the relative saving rate of the top 1 percent of the income distribution in the United States has been roughly 300 percent of the aggregate saving rate since 1980. While Pasinetti (1962), Samuelson andModigliani (1966), andZamparelli (2016) all posited differential savings rates between capitalists and workers, none of them offered a behavioral explanation for the difference. Our model differs from these contributions by grounding differential savings rates in the prevalence of other-regarding preferences, which increase consumption and reduce savings and wealth accumulation, at the lower end of the income distribution.…”

Section: Introductionmentioning

confidence: 99%

“…Recently, Zamparelli (2016) revisited the debate on the long-run distribution of wealth between classes initiated by Pasinetti (1962) and Samuelson and Modigliani (1966). In an a two-class, exogenously growing economy where "capitalists" save at higher rates than "workers" Pasinetti (1962) famously demonstrated the irrelevance of workers'…”

Section: Introductionmentioning

confidence: 99%

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Income Shares, Secular Stagnation, and the Long-Run Distribution of Wealth

Petach

Tavani

2018

SSRN Journal

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in ABSTRACTFour alarming stylized facts have characterized the recent economic history of the United States: (i) a fall in labor productivity; (ii) a fall in the labor share, (iii) an increase in the capital income ratio, and (iv) an increase in the wealth share owned by top income earners. In this paper, we offer a non-Neoclassical explanation for these facts that merges the Pasinetti (1962) approach to differential saving propensities among classes with the theory of induced technical change (ITC) by Kennedy (1964). First, we provide a simple microeconomic rationale for workers' saving propensity being lower than capitalists' based on the empiricallysupported argument that consumption peer effects are more prevalent at lower brackets of the income distribution (Petach and Tavani, 2018). We then show that institutional changes that lower the labor share -a decline in unionization, an increase in monopsony power in the labor market, the so-called 'race to the bottom' fostered by a hyper-competitive global environment, or the exhaustion of path-breaking scientific discoveries as argued by Gordon (2015) -can explain the decline in labor productivity growth because of the reduced incentives to innovate to save on labor costs. Combined with ITC, differential savings delivers a direct relationship between the capitalist share of wealth and the capital-income ratio independent of the elasticity of substitution between capital and labor. Finally, we argue that these tendencies are not inevitable: tax policy can be used to implement any wealth distribution, similarly to Zamparelli (2016); while worker-crushing institutional arrangements can be reversed through counteracting policy changes. However, both policy changes appear unlikely given the current institutional and global climate. Abstract Four alarming stylized facts have characterized the recent economic history of the United States: (i) a fall in labor productivity; (ii) a fall in the labor share, (iii) an increase in the capitalincome ratio, and (iv) an increase in the wealth share owned by top income earners. In this paper, we offer a non-Neoclassical explanation for these facts that merges the Pasinetti (1962) approach to differential saving propensities among classes with the theory of induced technical change (ITC) by Kennedy (1964). First, we provide a simple microeconomic rationale for workers' saving propensity being lower than capitalists' based on the empirically-supporte...

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Section: Institutional Change and Secular Stagnationmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

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Income Shares, Secular Stagnation, and the Long-Run Distribution of Wealth

Petach

Tavani

2018

SSRN Journal

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“…Distributional Effects of Public Investment widely considered irrelevant (Pasinetti, 1966(Pasinetti, , 1974. 2 Given the empirical evidence summarized by Piketty (2014), one may rather wonder whether the anti-dual outcome, that high income households own all capital, is a real possibility (Taylor, 2014;Zamparelli, 2015).…”

mentioning

confidence: 99%

Distributional Effects of Public Investment when Wealth and Classes are Back

et al. 2016

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In developed economies, wealth inequality is high, while public capital is underprovided. Here, we study the impact of heterogeneity in saving behavior and income sources on the distributional effects of public investment. A capital tax is levied to finance productive public capital in an economy with two types of households: high income households who save dynastically and middle income households who save for retirement. We find that inequality is reduced the higher the capital tax rate is and that low tax rates are Pareto‐improving. There is no clear‐cut trade‐off between efficiency and equality: middle income households’ consumption is maximal at a capital tax rate that is higher than the rate which maximizes high income households’ consumption.

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A two-class economy from the multi-sectoral perspective: the controversy between Pasinetti and Meade–Hahn–Samuelson–Modigliani revisited

Kurose

2021

Evolut Inst Econ Rev

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Wealth Distribution, Elasticity of Substitution and Piketty: An ‘Anti‐Dual’ Pasinetti Economy

Cited by 21 publications

References 53 publications

Income Shares, Secular Stagnation, and the Long-Run Distribution of Wealth

Income Shares, Secular Stagnation, and the Long-Run Distribution of Wealth

Distributional Effects of Public Investment when Wealth and Classes are Back

A two-class economy from the multi-sectoral perspective: the controversy between Pasinetti and Meade–Hahn–Samuelson–Modigliani revisited

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