Income Inequality —— Analysis Based on Dynamic Economic Growth Model

Abstract

In the continuous forward development of the world economy, the issue of wealth disparity has become increasingly prominent, gradually becoming a focal point in the socio-economic development of countries. It is worth thinking about the future trend of income inequality. In previous studies, it was generally believed that under current conditions, the wealth gap would continue to widen rather than narrow. This paper takes a conservative stance on this widely held view. I believe that during economic development, the autonomous creation and learning of technology will gradually reduce this gap, even if relevant studies suggest that technical barriers may hinder technological learning.

However, previous studies on income inequality have predominantly focused on static analyses. Building upon the traditional Cobb-Douglas (C-D) function, this study introduces the concept of growth residual per capita income for dynamic analysis. The model reveals that when capital growth rate equals labor growth rate and the latter remains positive, the growth residual per capita income exhibits a monotonically decreasing trend, with its maximum value occurring at the technological progress growth rate.