Economic Inequality between Groups in an a priori Stratified Society

Abstract

We present an agent-based model of economic exchange in a society composed of two groups, representing two social groups and with different internal protection rules for the poor agents. The goal is to address the emerging wealth distribution when economic rules are not the same for all individuals. Individuals exchange wealth in pairwise interactions with no underlying lattice. The wealth, risk aversion factor, and group of the agents characterize their state. The wealth exchanged between two agents obeys a fair rule: the quantities put at stake by them are the same regardless of who wins. One agent can interact with another agent in the same or the other group, controlled by a rate which is a parameter of the model. Inter-group exchanges obey an exclusive protection rule, which can be understood as a public policy to reduce inequality. We show that the most protected group accumulates more wealth, has less inequality, and has higher mobility than the other group. The results of simulations are compared with income distribution in Brazil discriminated by race as an example of the application our model.