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The exponential Pareto model with hidden income processes: Evidence from Chile

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  • Díaz, Juan D.
  • Gutiérrez Cubillos, Pablo
  • Tapia Griñen, Pablo

Abstract

Building on the two-class income model (Banerjee and Yakovenko, 2010), this paper proposes a new methodology to estimate the income distribution that accounts for hidden sources of income, such as retained earnings. We promote and illustrate this methodology with a case study of the Chilean economy. Our results reveal that after including the hidden sources of income, economic inequality in Chile has remained relatively constant over the last 15 years.

Suggested Citation

  • Díaz, Juan D. & Gutiérrez Cubillos, Pablo & Tapia Griñen, Pablo, 2021. "The exponential Pareto model with hidden income processes: Evidence from Chile," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 561(C).
    • Handle: RePEc:eee:phsmap:v:561:y:2021:i:c:s0378437120306245
    DOI: 10.1016/j.physa.2020.125196
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