Complex network model of the phase transition on the wealth distributions - from Pareto to the society without middle class

TL;DR

This paper presents a complex network model illustrating a phase transition in wealth distribution, showing a shift from Pareto to a society lacking a middle class, characterized as a second-order phase transition.

Contribution

It introduces a novel network-based model linking social connectivity to wealth distribution and identifies a phase transition with critical exponents.

Findings

Wealth distribution transitions from Pareto law to a gap distribution.

The transition is characterized as a second-order phase transition.

An order parameter and critical exponent are defined and calculated.

Abstract

A model of distribution of the wealth in a society based on the properties of complex networks has been proposed. The wealth is interpreted as a consequence of communication possibilities and proportional to the number of connections possessed by a person (as a vertex of the social network). Numerical simulation of wealth distribution shows a transition from the Pareto law to distribution with a gap demonstrating the absence of the middle class. Such a transition has been described as a second-order phase transition, the order parameter has been introduced and the value of the critical exponent has been found.