Fig 1.
Historical economic inequality in the US.
The Wealth (blue) and labor income (orange) inequality (pre-taxes) in the US for 1930–2010. The wealth inequality is quantified by the share of wealth owned by the richest 10% of the population. The income inequality is measured using the Gini index [19]. Data is taken from Piketty and Saez [3] and Saez and Zucman [20].
Fig 2.
The initial distributions of income and wealth.
The Wealth (blue) and disposable income (orange) distributions representing the distributions from which the initial individual wealth and income values are drawn in the model. The wealth and income were normalized for proper display. These distributions depict the realistic 1930 wealth and income distributions in the US. The data are taken from Piketty and Zucman [11] for the income distribution and from Wolff [37] for the wealth distribution.
Fig 3.
The division of wealth and income to deciles.
Left panel: An illustration of the division to deciles—every time step n, each individual, with disposable income Di and wealth Wi is attached to a certain decile in income and wealth according to the distribution of the entire population. Middle panel: The dependence of the disposable income fraction, , on the income decile. Right panel: The dependence of
on the wealth decile. The presented values of
and
are not normalized. In practice the values are normalized so that
and
.
Fig 4.
The model results for the historical wealth inequality measures in the United States during 1930–2010.
The results produced by implementing the model (red) were calculated using the historical data for the various parameters [11, 20]. The historical data (blue) were taken from Saez and Zucman [20]. The results are given for the top 10% share of wealth (left) and for the reconstructed historical wealth Gini index (right), based on Saez and Zucman [20].
Fig 5.
The predictive power of the model.
Left panel: Retrospective predictions of the wealth inequality in the US. The blue and red curves present the historical wealth inequality behavior and the model behavior for the historical values of the parameters, respectively (see Fig 4). The results for the various scenarios during 1980–2010 are also presented: Unchanged parameter scenario (solid black curve), increasing savings scenario (green crosses), decreasing savings scenario (black stars), decreasing income inequality scenario (green diamonds) and increasing income inequality scenario (black triangles). The dotted gray line separates the calculation using historical parameter values and the retrospective prediction. Right panel: Future predictions of the wealth inequality in the US. The blue curve displays the historical wealth inequality behavior, in addition to a linear extrapolation for 2008–2030. The solid red curve presents the model results for the historical parameter values and the extrapolated parameter scenario. The results for the various parameter scenarios during 2008–2030 are also presented: increasing savings scenario (green crosses), decreasing savings scenario (black stars), decreasing income inequality scenario (green diamonds) and increasing income inequality scenario (black triangles). The dotted gray line separates the calculation using historical parameter values and the prediction for future inequality.
Fig 6.
The effect of personal savings on wealth inequality.
The blue and red curves present the historical wealth inequality behavior and the model behavior for the historical values of the parameters, respectively (see Fig 4). The black curve depicts the model results when the savings in the period 1980–2010 are taken as constant and equal to 10%, while the other model parameters are considered with their historical values. The dotted gray line separates between the calculation using historical parameter values and with the altered parameters.
Fig 7.
The joint effect of personal savings and income inequality on wealth inequality.
This contour plot displays the change in wealth inequality between 2007 and 2020, according to the model results, given that the income inequality Gini index values were linearly changed up to a final value ranging between 0.15 to 0.65 (after tax) and the personal saving rates were linearly changed at the same time up to a final value between -8% to 20%. The other model parameters were extrapolated as done for the predicted results. The curliness of some of the contour is due to statistical error.
Fig 8.
Income and wealth inequality worldwide.
The wealth and after-tax income Gini indices for various countries divided according to income levels (GDP per capita in PPP 2000 dollars)—low (black circles), middle (red plus signs), middle-high (blue crosses) and high (magenta diamonds), corresponding to < 2500$, < 12000$, < 25000$ and > 25000$ per year. Sweden (SWE), Denmark (DK), Switzerland (CH), USA (USA) and South-Africa (ZA) are tagged. The data are taken from [15] and [54] and is relevant for the early 2000’s.