Distribution of the Populations Income
August 11th, 2010
Distribution of incomes will change on each generation following the changes in the distribution of workers at various categories and changes in the number of the company owners. Since the assumption of the population does not change from one generation to another, so each worker has one child and every company owners educate their children to become the company owners like himself and all workers educate their children to become workers in the same category as himself.
With such condition, if the number of companies have not changed, the distribution of workers in various categories and the income distribution will not change, but when the capital stock grows, the new company will be build. This is due to the assumption that the optimal size of each company will remain constant at all generations and there are no changes in technology.
Furthermore, with the assumption that the distribution of ability among the population on each generation is constant, then every worker tries to find a job in the category that is appropriate with his abilities. However, the ability of workers is not fixed, so that they may be suitable for working in the other categories.
Their work is determined by their abilities and the availability of employment at the labor market. Remember that the characteristics that are needed to become a good entrepreneur are distributed among the population, so in every generation there will be an individual mobility from the worker class into the class of the owner of the company.
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