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A Positive And A Normative Theory Of Income Distribution

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  • Jan Tinbergen

Abstract

A positive theory of income distribution based on assumptions concerning the supply of and demand for each type of productive service is presented. The demand function of the organizers of production may be derived from the maximization of profits with the income scale and the production function as restrictions. A normative theory based on the maximization of a social utility or welfare function is also considered. In the normative theory, production functions and balance equations (some representing compartmentalization of factor markets) are introduced as restrictions and again an income scale results, this time maximizing social welfare. Empirical testing is also considered. The positive theory was developed in part to take into consideration the fact that personal income distributions can reasonably well be described by log normal distributions, and that skill parameters are often normally distributed. Limited testing of the influence of wealth, intelligence, education, and sex suggest that these account for only a small part of the variance in the income distribution. This suggests the need for further research.

Suggested Citation

  • Jan Tinbergen, 1970. "A Positive And A Normative Theory Of Income Distribution," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 16(3), pages 221-234, March.
    • Handle: RePEc:bla:revinw:v:16:y:1970:i:3:p:221-234
    DOI: 10.1111/j.1475-4991.1970.tb00699.x
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    Cited by:

    1. Plug, Erik J. S. & van Praag, Bernard M. S. & Hartog, Joop, 1999. "If we knew ability, how would we tax individuals?," Journal of Public Economics, Elsevier, vol. 72(2), pages 183-211, May.
    2. Srinivasan T.N., 1992. "Income Distribution and the Macroeconomy: Some Conceptual and Measurement Issues," Philippine Journal of Development JPD 1992 Vol. XIX No. 2-a, Philippine Institute for Development Studies.
    3. Gary S. Becker & Nigel Tomes, 1994. "Human Capital and the Rise and Fall of Families," NBER Chapters, in: Human Capital: A Theoretical and Empirical Analysis with Special Reference to Education, Third Edition, pages 257-298, National Bureau of Economic Research, Inc.
    4. ANA CECILIA PARADA ROJAS & Humberto Ríos Bolívar & JORGE OMAR RAZO DE ANDA, 2019. "Mining Of Classification Trees To Analyze A Multidimensional Phenomenon," Proceedings of International Academic Conferences 9010809, International Institute of Social and Economic Sciences.
    5. Bryant, W. Keith & Bawden, D.L. & Saupe, W.E., 1981. "PART I. The Economics of Rural Poverty," AAEA Monographs, Agricultural and Applied Economics Association, number 337226, january.
    6. ANA CECILIA PARADA ROJAS & Humberto Ríos Bolívar & Jorge Omar Razo De Anda, 2019. "Mining Of Classification Trees To Analyze A Multidimensional Phenomenon," Proceedings of International Academic Conferences 9110842, International Institute of Social and Economic Sciences.
    7. Stark, Oded & Kobus, Martyna & Jakubek, Marcin, 2012. "A concern about low relative income, and the alignment of utilitarianism with egalitarianism," Economics Letters, Elsevier, vol. 114(3), pages 235-238.
    8. Syed Nawabhaider Naqvi & Asghar Qadir, 1985. "Incrementalism and Structural Change. A Technical Note," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 24(2), pages 87-102.
    9. Bauer, Johannes M., 2018. "The Internet and income inequality: Socio-economic challenges in a hyperconnected society," Telecommunications Policy, Elsevier, vol. 42(4), pages 333-343.

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