Application of Mean Field Games to Growth Theory

Jean-Michel Lasry (1) , Pierre Louis Lions (1, 2) , Olivier Guéant (1)

1 CEREMADE - CEntre de REcherches en MAthématiques de la DEcision
2 Collège de France - Chaire Équations aux dérivées partielles et applications

This article discusses the interaction between economic growth in the sense of human capital accumulation and the dynamics of inequalities. We use a mean-field game framework in which individuals improve their human capital both to improve their wages and to avoid potential competition with less skilled individuals. Our contribution is twofold. First, we exhibit a mechanism in which competition between a continuum of people regarding human capital accumulation lead to growth. Second, our model highlights the importance of Pareto distributions to describe inequalities since power laws appear naturally as explicit solutions of our problem.

Domaines: Equations aux dérivées partielles [math.AP]

Jean-Michel Lasry, Pierre Louis Lions, Olivier Guéant. Application of Mean Field Games to Growth Theory. 2008. ⟨hal-00348376⟩