Income shares, wealth and growth

Stochastic income and wealth

As is well known, the deterministic version of the maximum principle allows us to state rigorously the relationship between deterministic income (essentially the Hamiltonian) and deterministic wealth (essentially the state evaluation function). As a background motivating point of departure, consider the simple story of an infinitely long-lived individual whose sole wealth consists of a bank dep...

Growth and Development with Income and Wealth Distribution

Statistical Theories of Income and Wealth Distribution

The distributions of income and wealth in countries across the world are found to possess some robust and stable features independent of the specific economic, social and political conditions of the countries. We discuss a few physics-inspired multiagent dynamic models along with their microeconomic counterparts, that can produce the statistical features of the distributions observed in reality...

Why Do Household Portfolio Shares Rise in Wealth?∗

In the cross-section of households, the portfolio share rises in wealth and has a non-decreasing age profile. The standard life-cycle model with homothetic utility and non-tradable labor income has the counterfactual implication that the portfolio share falls in both wealth and age. We develop a life-cycle model in which households have nonhomothetic utility over two types of consumption goods,...

Net Income, Gross Income, and Bias in Child Support Awards in Gross Income-Shares States

In this study I discuss the pros and cons of using net income vs. gross income in gross income-shares states. It is argued that the “standardized net” approach is the best approach in determining child support awards based on the combined principles of equity and accuracy. However most states use gross income approaches for the sake of simplicity. Such gross income approaches can generate biase...