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Distribution of Personal Income: Development of a New Model and Its Application to U.S. Income Data

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  • Majumder, Amita
  • Chakravarty, Satya Ranjan

Abstract

This paper proposes a four-parameter statistical model of the personalized distribution of income using the "income share elasticity" approach suggested by Esteban (1986). Our proposed model includes the Singh-Maddala (1976) and Dagum (1977) distributions as special cases. The generalized beta II distribution of McDonald (1984) is also a variant of this model. It appears to give an excellent fit to U.S. income data and its empirical performance turns out to be superior to those of the Singh-Maddala (1953) distributions and the generalized beta II distribution of McDonald (1984) on some data. Copyright 1990 by John Wiley & Sons, Ltd.

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Bibliographic Info

Article provided by John Wiley & Sons, Ltd. in its journal Journal of Applied Econometrics.

Volume (Year): 5 (1990)
Issue (Month): 2 (April-June)
Pages: 189-96

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Handle: RePEc:jae:japmet:v:5:y:1990:i:2:p:189-96

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Cited by:
  1. Christophe Muller, 2001. "The Properties of the Watts Poverty Index under Lognormality," Economics Bulletin, AccessEcon, vol. 9(1), pages 1-9.
  2. Quan Gan & Robert J. Hill, 2008. "Measuring Housing Affordability: Looking Beyond the Median," Discussion Papers 2008-09, School of Economics, The University of New South Wales.
  3. Dorothée Boccanfuso & Bernard Decaluwé & Luc Savard, 2003. "Poverty, Income Distribution and CGE Modeling: Does the Functional Form of Distribution Matter?," Cahiers de recherche 0332, CIRPEE.
  4. Jayasri Dutta & J. A. Sefton & M. R. WEALE, 2001. "Income distribution and income dynamics in the United Kingdom," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 16(5), pages 599-617.
  5. Corrado Benassi & Marcella Scrimitore, 2013. "Income Distribution in Network Markets," Working Paper Series 13_13, The Rimini Centre for Economic Analysis.
  6. Dong, Diansheng & Capps, Oral, Jr., 1998. "Impacts Of Income Distribution On Market Demand," 1998 Annual meeting, August 2-5, Salt Lake City, UT 20996, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
  7. Makowsky, Michael, 2009. "Religion, Clubs, and Emergent Social Divides," MPRA Paper 14359, University Library of Munich, Germany.
  8. Fabio Clementi & Mauro Gallegati & Giorgio Kaniadakis, 2010. "A model of personal income distribution with application to Italian data," Empirical Economics, Springer, vol. 39(2), pages 559-591, October.
  9. Kleiber, Christian, 1996. "Dagum vs. Singh-Maddala income distributions," Economics Letters, Elsevier, vol. 53(3), pages 265-268, December.
  10. Malcolm Asadoorian, 2008. "Simulating the spatial distribution of population and emissions to 2100," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 39(3), pages 199-221, March.
  11. Mittelhammer, Ronald C. & Shi, Hongqi & Wahl, Thomas I., 1996. "Accounting For Aggregation Bias In Almost Ideal Demand Systems," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 21(02), December.
  12. Corrado Benassi & Alessandra Chirco, 2006. "Income Share Elasticity and Stochastic Dominance," Social Choice and Welfare, Springer, vol. 26(3), pages 511-525, June.
  13. Toda, Alexis Akira, 2012. "The double power law in income distribution: Explanations and evidence," Journal of Economic Behavior & Organization, Elsevier, vol. 84(1), pages 364-381.
  14. van den Berg, Gerard J, 2005. "On the Uniqueness of Optimal Prices Set by Monopolistic Sellers," CEPR Discussion Papers 5166, C.E.P.R. Discussion Papers.
  15. Makowsky, Michael, 2009. "Religious Extremism, Clubs, and Civil Liberties: A Model of Religious Populations," MPRA Paper 14358, University Library of Munich, Germany.
  16. John Dagsvik & Zhiyang Jia & Bjørn Vatne & Weizhen Zhu, 2013. "Is the Pareto–Lévy law a good representation of income distributions?," Empirical Economics, Springer, vol. 44(2), pages 719-737, April.
  17. Fernholz, Robert, 1999. "On the diversity of equity markets," Journal of Mathematical Economics, Elsevier, vol. 31(3), pages 393-417, April.
  18. Feng Zhu, 2005. "A nonparametric analysis of the shape dynamics of the US personal income distribution: 1962-2000," BIS Working Papers 184, Bank for International Settlements.

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