Will wealth become more concentrated in Europe? Evidence from a calibrated neo-Kaleckian model

By Stefan Ederer, Miriam Rehm

PKES Working Paper 1717

December 2017

We develop and calibrate an analytical growth model in the neo-Kaleckian tradition with an endogenous wealth distribution and differential returns to wealth between workers and capitalists. We show that a long-run equilibrium allows for non-zero wealth owned by workers, even as the model contains the “triumph of the rentier” predicted by Piketty’s r > g as a special case. The model’s calibration to ten European countries shows that the distribution of wealth is likely to become more unequal in all cases, barring political countermeasures.

Keywords: inequality, wealth, income, neo-Kaleckian theory, model calibration

JEL classification: D31 E12 E21