Study reveals how initial capital levels impact wealth inequality dynamics
The article explores how wealth and income are distributed in a model where people start with different amounts of money and can choose how much they work. By assuming that people care about both money and free time, the model shows that the overall economy doesn't depend on how wealth is spread out. The study reveals that the initial amount of money in the economy determines whether inequality goes up or down over time. Even small changes in the amount of money available can have long-lasting effects on who has more wealth. And finally, changes in how much workers get paid may not always match changes in who has more money.