Double power laws in income and wealth distributions
Ricardo Coelho, Peter Richmond, Joseph Barry, Stefan Hutzler
TL;DR
This paper investigates the dual power law regimes in income and wealth distributions, revealing differences in Pareto exponents between the super-rich and top earners, and introduces a model to replicate these features.
Contribution
The paper extends the Slanina model to successfully reproduce the observed double power law behavior in wealth and income distributions.
Findings
The wealth distribution exhibits two distinct power law regimes.
The Pareto exponents differ between the super-rich and top earners.
The extended model can replicate the double power law features.
Abstract
Close examination of wealth distributions reveal the existence of two distinct power law regimes. The Pareto exponents of the super-rich, identified for example in rich lists such as provided by Forbes are smaller than the Pareto exponents obtained for top earners in income data sets. Our extension of the Slanina model of wealth is able to reproduce these double power law features.
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