A System Dynamics Model of Income Distribution Between Labor and Capital for Turkey

Abstract

System dynamics approach models a system of variable interactions and is able to explain causal links and feedback loops between those variables. In this context, system dynamics can be applied to analyzing income distribution dynamics of an economy. In this study, we perform an income distribution analysis of the Turkish economy using Goodwin's growth cycle model as the main system dynamics model in economics. The findings of the study show that the distribution of GDP between the labor and the capital has a cyclical dynamic feature for Turkey in the 1965-2015 period.