Inequality and Power Laws (Desigualdad y Leyes de Potencia) (Spanish)
Yalila Aljure Jiménez
Pontifical University Javeriana Inicio
Jorge Andrés Gallego
Universidad Nacional de Colombia
December 30, 2010
Cuadernos de Economía, Vol. 29, No. 53, p. 57, 2010
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, O15Accepted Paper Series
Date posted: January 18, 2011
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