TY  - JOUR
A1  - Stojkoski, Viktor
A1  - Jolakoski, Petar
A1  - Pal, Arnab
A1  - Sandev, Trifce
A1  - Kocarev, Ljupco
A1  - Metzler, Ralf
T1  - Income inequality and mobility in geometric Brownian motion with stochastic resetting: theoretical results and empirical evidence of non-ergodicity
JF  - Philosophical transactions of the Royal Society A: Mathematical, physical and engineering sciences
N2  - We explore the role of non-ergodicity in the relationship between income inequality, the extent of concentration in the income distribution, and income mobility, the feasibility of an individual to change their position in the income rankings. For this purpose, we use the properties of an established model for income growth that includes 'resetting' as a stabilizing force to ensure stationary dynamics. We find that the dynamics of inequality is regime-dependent: it may range from a strictly non-ergodic state where this phenomenon has an increasing trend, up to a stable regime where inequality is steady and the system efficiently mimics ergodicity. Mobility measures, conversely, are always stable over time, but suggest that economies become less mobile in non-ergodic regimes. By fitting the model to empirical data for the income share of the top earners in the USA, we provide evidence that the income dynamics in this country is consistently in a regime in which non-ergodicity characterizes inequality and immobility. Our results can serve as a simple rationale for the observed real-world income dynamics and as such aid in addressing non-ergodicity in various empirical settings across the globe.This article is part of the theme issue 'Kinetic exchange models of societies and economies'.
KW  - income inequality
KW  - income mobility
KW  - geometric Brownian motion
KW  - non-ergodicity
KW  - stochastic resetting
Y1  - 2022
U6  - https://doi.org/10.1098/rsta.2021.0157
SN  - 1364-503X
SN  - 1471-2962
VL  - 380
IS  - 2224
PB  - Royal Society
CY  - London
ER  -