Studies On The Dynamic Evolution Of Inequality Of Personal Income And Wealth Distribution

Income and wealth distribution inequality between individuals is not just aneconomic issues, it also with social equity and justice together. In this paper, wemainly use the mathematical models to analyze the process of the interaction betweeninequality of income and wealth distribution and economic growth that could help weto study the evolution of inequality trends.This paper studies dynamic evolution of theinequality of income and wealth distribution in some situations that involve theeconomic growth, the generations and intergeneration, as well as the relevanteconomic mechanisms (heritage, investment in human capital etc.). First, we analysethe dynamic evolution of the inequality of income and wealth distribution in anRamsey model when the economy converge to the steady-state and on the balancedgrowth path. Secondly, we use a overlapping generations model with the heritagemechanism to analyse the dynamic evolution of the inequality of income and wealthdistribution. In this study,we considered the influence of the limited life and theintergenerational contaction,and the determinants of inequality when the economy onthe steady-state. Again, we analyse the dynamic evolution of the inequality of incomeand wealth distribution under the joint effect of the human capital mechanism and theinheritance mechanism by adding human capital investment and human capitalaccumulation in the model. We also analyse the effects of inequality on the economicgrowth at all stages of economic development.This paper believes that the dynamic evolution of income and wealth distributionis very complex, the convergence of the income and wealth distribution depends onseveral conditions,the two most important conditions are the market completeness andthe changes of the factor income. When the human capital investment as the mainway of intergenerational contaction, the market are completely or not and the factorincome increase or decrease has important influence to the dynamic evolution ofincome and wealth distribution.When market is incomplete,we assume that all people are no other differences butinitial wealth endowments. If the returns to scale of human capital output was decrease,so, in the process of economic transition from a lower level to a steady-state,the level of wealth of all individuals tend to have completely identical, unequal ofwealth distribution does not exist on the stable equilibrium. If the returns to scale ofhuman capital output was constant, regardless whether there is the steady-state levelof the economy, unequal of wealth distribution will not be any change, the initialinequality of wealth distribution has persisted.If the returns to scale of human capitaloutput was increase, the equilibrium of economic system is unstable.In the process ofeconomic transition from a lower level to a steady-state, the inequality of wealthdistribution will rising.on the contrary, if the process of economic transition from ahigher level to a steady-state, the inequality of wealth distribution will rising and thepolarization will become increasingly serious. When market is complete, If the returnsto scale of human capital output was decrease, the inequality of wealth distributionwill always converge to absolute equality. When the economy is lower than the stableequilibrium point, and then compared with incomplete markets, complete market hasmore faster convergence. When the economy is higher than the stable equilibriumpoint, complete market has more slower convergence. If the returns to scale of humancapital output was constant,the rate of return on saving be the same as human capitalinvestment, unequal of wealth distribution will not be any change, the initialinequality of wealth distribution has persisted. If the returns to scale of human capitaloutput was increase,the same situation as the incomplete markets.