Fractal Theory of Income Distribution

This paper uses elements of fractal geometry to describe the distribution of income among individuals. It shows the existence of a stochastic fractal relationship between a country’s output and income inequality: the higher the level of income inequality, the lower the country’s output. The framework thus allows us to isolate the impact of inequality on output from that of average growth. A parallel between this framework and a welfarist approach to distributional analysis is also discussed. (Stone Center on Socio-Economic Inequality Working Paper)