Agent-based model of the effect of globalization on inequality and class mobility

We consider a variant of the Bouchaud–Mézard model for wealth distribution in a society which incorporates the interaction radius between the agents, to model the extent of globalization in a society. The wealth distribution depends critically on the extent of this interaction. When interaction is relatively local, a small cluster of individuals emerges which accumulate most of the society’s wealth. In this regime, the society is highly stratified with little or no class mobility. As the interaction is increased, the number of wealthy agents decreases, but the overall inequality rises as the freed-up wealth is transferred to the remaining wealthy agents. However when the interaction exceeds a certain critical threshold, the society becomes highly mobile resulting in a much lower economic inequality (low Gini index). This is consistent with the Kuznets upside-down U shaped inequality curve hypothesis.