A Neoclassical Theory of Wealth Distribution

The linear savings function in Stiglitz' model of wealth
distribution is replaced by the assumption that the average savings
propensity of each individual is determined by its relative income
position and the marginal propensity to save is an increasing
function of individual income. It is shown that the model generates
locally stable two-class equilibria under certain conditions which
are analyzed carefully. In other words, Pasinetti-type class
savings behaviour is explained endogeneously. A two-class property
of nonstationary solutions is explained