Assessing reasonable limits of inequality on the basis of a new model of income distribution
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Abstract
In the first section of the work, problems of inequality in Russia are examined. In the second section, the new model of income distribution developed by author and its application for analysis of the inequality problems are discussed. In the core of the method is the assumption that one may construct a specific sequence based on the polynomial with all its roots on the unit circle and characterized by some parameter determined as an income indicator. The work makes several contributions to the basic theory of measurement and analysis of inequality. It is shown using specially constructed utility function, calculations of the Shapley value, and analysis of some dynamic models that at present the preferable level of inequality for developed countries corresponds to the value of Gini coefficient in the range approximately fr om 0.25 to 0.40. The results obtained show that problems of ethics are now the most important for sustainable economic growth
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