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: Personal Income, Wealth, and Their Distributions E12: General Aggregative Models: Keynes; Keynesian; Post-Keynesian E21: Macroeconomics: Consumption; Saving; Wealth
Download: Working Paper PKWP1717