Inequality and Power Laws (Desigualdad y Leyes de Potencia) (Spanish)

Abstract:     
For some, the income distribution is the first example of a power law, empiric rule whereof an random variable reaches high values with a low probability and low values with a high probability. This article corroborates if the income distribution of the richest Colombians adjusts to a power law. Similarly, considering Yule’s process (1925), and in general, stochastic processes’ theory, a theoretical model, whose objective is to explain why income is distributed according to a power rule, is formulated. The essence of the model is that wealth presents an accumulative effects, therefore, at a higher income level, higher the probability of increasing it.

Note: Downloadable document is in Spanish.

Number of Pages in PDF File: 39

Keywords: Inequality, Power Laws, Pareto’s Law, Stochastic Processes, Yule's Process

JEL Classification: C13, C12, O15

Accepted Paper Series