# Inequality, mobility and the financial accumulation process: A computational economic analysis

## TL;DR

This paper uses computational economic models to analyze how financial accumulation, inequality, and mobility interact, highlighting the impact of return structures and taxation on wealth distribution over time.

## Contribution

It extends a baseline model by Levy et al. to include stylized return structures and taxation, providing new insights into the dynamics of inequality and mobility.

## Key findings

- Compound returns significantly drive inequality.
- Taxation and institutional arrangements shape economic evolution.
- Simplified models reveal key drivers of wealth distribution.

## Abstract

Our computational economic analysis investigates the relationship between inequality, mobility and the financial accumulation process. Extending the baseline model by Levy et al., we characterise the economic process through stylised return structures generating alternative evolutions of income and wealth through time. First, we explore the limited heuristic contribution of one and two factors models comprising one single stock (capital wealth) and one single flow factor (labour) as pure drivers of income and wealth generation and allocation over time. Second, we introduce heuristic modes of taxation in line with the baseline approach. Our computational economic analysis corroborates that the financial accumulation process featuring compound returns plays a significant role as source of inequality, while institutional arrangements including taxation play a significant role in framing and shaping the aggregate economic process that evolves over socioeconomic space and time.