Neoclassical Distribution Theory
In neoclassical economics, the supply and demand of each factor of production interact in factor markets to determine equilibrium output, income, and the income distribution. Factor demand in turn incorporates the marginal-productivity relationship of that factor in the output market. Analysis applies to not only capital and land but the distribution of income in labor markets.
The neoclassical growth model provides an account of how distribution of income between capital and labor are determined in competitive markets at the macroeconomic level over time with technological change and changes in the size of the capital stock and labor force. More recent developments of the distinction between human capital and physical capital and between social capital and personal capital have deepened analysis of distribution.
Read more about this topic: Distribution (economics)
Famous quotes containing the words distribution and/or theory:
“Classical and romantic: private language of a family quarrel, a dead dispute over the distribution of emphasis between man and nature.”
—Cyril Connolly (1903–1974)
“The weakness of the man who, when his theory works out into a flagrant contradiction of the facts, concludes “So much the worse for the facts: let them be altered,” instead of “So much the worse for my theory.””
—George Bernard Shaw (1856–1950)