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Pareto's Law for Income of Individuals and Debt of Bankrupt Companies

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  • Hideaki Aoyama
  • Yuichi Nagahara
  • Mitsuhiro P. Okazaki
  • Wataru Souma
  • Hideki Takayasu
  • Misako Takayasu
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    Abstract

    We analyze the distribution of income and income tax of individuals in Japan for the fiscal year 1998. From the rank-size plots we find that the accumulated probability distribution of both data obey a power law with a Pareto exponent very close to -2. We also present an analysis of the distribution of the debts owed by bankrupt companies from 1997 to March, 2000, which is consistent with a power law behavior with a Pareto exponent equal to -1. This power law is the same as that of the income distribution of companies. Possible implications of these findings for model building are discussed.

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    File URL: http://arxiv.org/pdf/cond-mat/0006038
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    Paper provided by arXiv.org in its series Papers with number cond-mat/0006038.

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    Date of creation: Jun 2000
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    Handle: RePEc:arx:papers:cond-mat/0006038

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    Web page: http://arxiv.org/

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    Cited by:
    1. Mercik, Szymon & Weron, Rafal, 2002. "Origins of scaling in FX markets," MPRA Paper 2294, University Library of Munich, Germany.
    2. Xin, Xiuying & Jia, Ning & Zheng, Liang & Ma, Shoufeng, 2014. "Power-law in pedestrian crossing flow under the interference of vehicles at an un-signalized midblock crosswalk," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 406(C), pages 287-297.
    3. Boris Podobnik & Davor Horvatic & Alexander M. Petersen & Branko Uro\v{s}evi\'c & H. Eugene Stanley, 2010. "Bankruptcy risk model and empirical tests," Papers 1011.2670, arXiv.org.
    4. Guo, Qiang & Gao, Li, 2012. "Distribution of individual incomes in China between 1992 and 2009," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 391(21), pages 5139-5145.
    5. Delli Gatti, Domenico & Di Guilmi, Corrado & Gaffeo, Edoardo & Gallegati, Mauro, 2004. "Bankruptcy as an exit mechanism for systems with a variable number of components," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 344(1), pages 8-13.
    6. Watanabe, Hayafumi & Takayasu, Hideki & Takayasu, Misako, 2013. "Relations between allometric scalings and fluctuations in complex systems: The case of Japanese firms," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 392(4), pages 741-756.
    7. Jean-Philippe Bouchaud, 2000. "Power-laws in economics and finance: some ideas from physics," Science & Finance (CFM) working paper archive 500023, Science & Finance, Capital Fund Management.

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