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PreprintCC BY 4.0arXiv

A New Model for the Income Distribution

Abstract

In this study, we propose a kinetic trap--diffusion model to describe the emergence of Pareto distributions in money-exchange systems. Using kinetic Monte Carlo simulations, we show that the Pareto exponent depends explicitly on temperature and takes values in the range 0.5 ≤ ν(T) ≤ 1.5. In the present framework, the temperature T acts as a control parameter that regulates the exchange dynamics through thermally activated diffusion. Unlike conventional kinetic exchange models, where the Pareto exponent is fixed by microscopic rules, the proposed model generates a range of Pareto exponents as a function of T. The temperature-dependent Pareto exponent constitutes the central novelty of the proposed kinetic trap--diffusion framework. This feature provides a natural explanation for the empirically observed variations in Pareto exponents across different countries and economic conditions. In addition, the fraction of zero-wealth agents and the Gini index exhibit a non-monotonic dependence on temperature, revealing distinct dynamical regimes arising from the competition between trapping and money mobility. The persistence of the Pareto-like stationary distribution under strongly nonuniform initial conditions further supports the robustness of the proposed mechanism. These results show that different Pareto-tail and inequality regimes can emerge from the same trap--diffusion dynamics through changes in a single control parameter

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BibTeX
@misc{aydiner2026model,
  title = {{A New Model for the Income Distribution}},
  author = {Ekrem Aydiner},
  howpublished = {arXiv},
  year = {2026},
  month = oct,
  doi = {10.48550/arxiv.2610.08143},
  eprint = {2610.08143},
  archivePrefix = {arXiv},
  url = {https://arxiv.org/abs/2610.08143},
  note = {CC BY 4.0},
}
RIS
TY  - UNPB
TI  - A New Model for the Income Distribution
AU  - Ekrem Aydiner
PY  - 2026
DA  - 2026/10/06
PB  - arXiv
DO  - 10.48550/arxiv.2610.08143
UR  - https://arxiv.org/abs/2610.08143
AB  - In this study, we propose a kinetic trap--diffusion model to describe the emergence of Pareto distributions in money-exchange systems. Using kinetic Monte Carlo simulations, we show that the Pareto exponent depends explicitly on temperature and takes values in the range 0.5 ≤ ν(T) ≤ 1.5. In the present framework, the temperature T acts as a control parameter that regulates the exchange dynamics through thermally activated diffusion. Unlike conventional kinetic exchange models, where the Pareto exponent is fixed by microscopic rules, the proposed model generates a range of Pareto exponents as a function of T. The temperature-dependent Pareto exponent constitutes the central novelty of the proposed kinetic trap--diffusion framework. This feature provides a natural explanation for the empirically observed variations in Pareto exponents across different countries and economic conditions. In addition, the fraction of zero-wealth agents and the Gini index exhibit a non-monotonic dependence on temperature, revealing distinct dynamical regimes arising from the competition between trapping and money mobility. The persistence of the Pareto-like stationary distribution under strongly nonuniform initial conditions further supports the robustness of the proposed mechanism. These results show that different Pareto-tail and inequality regimes can emerge from the same trap--diffusion dynamics through changes in a single control parameter
ER  -