From microscopic taxation and redistribution models to macroscopic income distributions

Details From microscopic taxation and redistribution models to macroscopic income distributions From microscopic taxation and redistribution models to macroscopic income distributions

2011-09-03

arxiv.org/abs/1109.0606v1

Physica A 390 (2011) 3782-3793

Physics

Physics and Society

12 pages, 4 figures. Version submitted to Physica A on Feb 15, 2011

Scientific paper

10.1016/j.physa.2011.06.008

We present here a general framework, expressed by a system of nonlinear differential equations, suitable for the modelling of taxation and redistribution in a closed (trading market) society. This framework allows to describe the evolution of the income distribution over the population and to explain the emergence of collective features based on the knowledge of the individual interactions. By making different choices of the framework parameters, we construct different models, whose long-time behavior is then investigated. Asymptotic stationary distributions are found, which enjoy similar properties as those observed in empirical distributions. In particular, they exhibit power law tails of Pareto type and their Lorenz curves and Gini indices are consistent with some real world ones.

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