We discuss a statistical model of evolution of wealth distribution , growing inequality and economic stratification in macro-economic scale. Evolution is driven by multiplicative stochastic fluctuations governed by the law of proportionate growth as well as by direct interactions between individuals and interactions between the private and public sectors. We concentrate on the effect of accumulated advantage and study the role of taxation and redistribution in the process of reducing wealth inequality. We show in particular that capital tax may significantly reduce wealth inequality and lead to a stabilisation of the system. The model predicts a decay of the population into economic classes of quantised wealth levels. The effect of economic stratification manifests in a characteristic multimodal form of the histogram of wealth distribution. We observe such a multimodal pattern in empirical data on wealth distribution for  urban areas of China.
We study an agent-based model of evolution of wealth distribution in a macro-economic system. The evolution is driven by multiplicative stochastic fluctuations governed by the law of proportionate growth and interactions between agents. We are mainly interested in interactions increasing wealth inequality that is in a local implementation of the accumulated advantage principle. Such interactions destabilise the system. They are confronted in the model with a global regulatory mechanism which reduces wealth inequality. There are different scenarios emerging as a net effect of these two competing mechanisms. When the effect of the global regulation (economic interventionism) is too weak the system is unstable and it never reaches equilibrium. When the effect is sufficiently strong the system evolves towards a limiting stationary distribution with a Pareto tail. In between there is a critical phase. In this phase the system may evolve towards a steady state with a multimodal wealth distribution. The corresponding cumulative density function has a characteristic stairway pattern which reflects the effect of economic stratification . The stairs represent wealth levels of economic classes separated by wealth gaps. As we show, the pattern is typical for macro-economic systems with a limited economic freedom. One can find such a multimodal pattern in empirical data , for instance, in the highest percentile of wealth distribution for the population in urban areas of China.
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the private and public sectors. We concentrate on the effect of accumulated advantage and study the role of taxation and redistribution in the process of reducing
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We show in particular that capital tax may significantly reduce wealth inequality and lead to a stabilisation of the system. The model predicts a decay of the population into economic classes of quantised wealth levels. The
There are different scenarios emerging as a net effect of these two competing mechanisms. When the effect of the global regulation (economic interventionism) is too weak the system is unstable and it never reaches equilibrium. When the effect is sufficiently strong the system evolves towards a limiting stationary distribution with a Pareto tail. In between there is a critical phase. In this phase the system may evolve towards a steady state with a multimodal wealth distribution. The corresponding cumulative density function has a characteristic stairway pattern which reflects the
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