A neo-classical theory of distribution and wealth
type: Item
instance of: scholarly article
title: A neo-classical theory of distribution and wealth
zbMATH Open document ID: 0591.90002
author: Hans Ulrich Buhl
published in: Lecture Notes in Economics and Mathematical Systems
publication date: 1986-01-01T00:00:00Z
review text: This book presents a class of neoclassical models for the determination of wealth and its distribution between workers and capitalists. Chapter 1 is an introduction to the issues involved in income and wealth distribution. Chapter 2 contains a brief survey of the literature, including the models of Lancaster, Hoel, Pohjola, Machacvzek and Burk. Chapter 3 presents the main results concerning distribution and wealth for an economy where the population is constant. Chapter 4 extends the models to allow for population growth. The implications of the results obtained in chapter 3 and 4 are further discussed in chapter 5. The models presented in chapter 3 distinguish two classes of agents in the economy - workers and capitalists. Workers receive wages as well as dividends for their savings. The residual between output and payments to workers becomes the incomes of capitalists. The production function is neoclassical. The first model assumes that both groups of agents cooperate perfectly to maximize the utility of the stream of aggregate consumption over a specified horizon, which can be either finite or infinite. The optimality conditions are shown to require that the net marginal product of capital equal the rate of change in the marginal utility of aggregate consumption. The second model assumes that workers control wages and they choose a sequence of wages so as to maximize the utility of the stream of wages over the specified horizon. The author shows that the optimality conditions for this economy coincide with those for the cooperative case only under rather restrictive conditions. Thus it is surprising that the optimality conditions for an economy in which capitalists choose a sequence of investments so as to maximize the utility of residual incomes support the cooperative equilibrium under a much less restrictive set of conditions. An interesting question that is raised in section 3.4 is how well the wage policies chosen by workers and the investment policies chos…
Mathematics Subject Classification ID: 91B60
Mathematics Subject Classification ID: 91B62
Mathematics Subject Classification ID: 90-02
Mathematics Subject Classification ID: 90C90
Mathematics Subject Classification ID: 90C39
zbMATH DE Number: 3950145
zbMATH Keywords: neoclassical models
zbMATH Keywords: determination of wealth
zbMATH Keywords: income and wealth distribution
zbMATH Keywords: population growth
zbMATH Keywords: Nash equilibrium
zbMATH Keywords: cooperative equilibrium
MaRDI profile type: Publication
description: scientific article; zbMATH DE number 3950145