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We propose to analyze the relationship between inequality and economic development by means of an Agent Based-Stock Flow Consistent model where workers have been differentiated into four classes competing on segmented labor markets, and where firms’ demand for each type of worker is affected by their hierarchical organization. In order to account for the impact of income and wealth distribution on consumption patterns, worker classes have diversified average propensities to consume and save. Finally, firms in the capital sector invest in R&D, thus possibly coming to produce more productive vintages of machineries, which affect the evolution of labor productivity in the consumption sector. The model is calibrated using realistic values for the income and wealth distribution across different income groups and their average propensities to consume. Results of the simulation experiments suggest that …