Asymptotic Income Distribution in the German Socio-Economic Panel (SOEP): Income Inequality and Darwinian Fitness

Abstract

In this paper, the relation between income inequality and population growth is analized from a Darwinian perspective. A Markov chain population growth model is presented and estimated using data from the German Socio-Economic Panel (SOEP). We estimate both population growth rates and steady-state income distribution for males and females. The results are compatible with the traditional age-based population growth models of demography, in so far as these are actually irreducible, positive-recurrent Markov chains. It is concluded that, from the perspective of individuals and family lines, income inequality may improve reproductive fitness of high-income individuals, and foster adaptive reproductive strategies for a given income level.