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On the Measurement of Functional Income Distribution

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  • Marco Ranaldi

    (CES - Centre d'économie de la Sorbonne - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique, PSE - Paris School of Economics - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement)

Abstract

The present paper proposes a theoretical framework to examine the relationship between the functional and personal distribution of income. To this end, it introduces the concept of inequality in income composition. Inequality in income composition is high when two different sources of income are separately earned by the top and the bottom of the income distribution. On the contrary, it is low when each individual has the same population share of the two sources. This article designs an indicator to measure income composition inequality, named income-factor concentration index. The sign of the indicator determines the condition of transmission for the rising share of income from any source to increase overall income inequality. This framework is then applied to several European countries on basis of EU-SILC data.

Suggested Citation

  • Marco Ranaldi, 2018. "On the Measurement of Functional Income Distribution," Post-Print halshs-01379229, HAL.
    • Handle: RePEc:hal:journl:halshs-01379229
    Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-01379229v4
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    References listed on IDEAS

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    1. Marco Ranaldi, 2017. "Income-Factor Polarization: A Methodological Approach," Documents de travail du Centre d'Economie de la Sorbonne 17054, Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne.
    2. Deutsch, Joseph & Fusco, Alessio & Silber, Jacques, 2013. "The BIP Trilogy (bipolarization, inequality and polarization): One saga but three different stories," Economics - The Open-Access, Open-Assessment E-Journal (2007-2020), Kiel Institute for the World Economy (IfW Kiel), vol. 7, pages 1-33.
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    9. Anthony B. Atkinson & Christoph Lakner, 2021. "Capital and Labor: The Factor Income Composition of Top Incomes in the United States, 1962-2006," The Review of Economics and Statistics, MIT Press, vol. 103(5), pages 892-904, December.
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    Cited by:

    1. , Stone Center & Ranaldi, Marco, 2020. "Distributional Aspects of Economic Systems," SocArXiv n7wj4, Center for Open Science.
    2. Roberto Iacono & Marco Ranaldi, 2023. "The Evolution of Income Composition Inequality in Italy, 1989–2016," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 69(1), pages 124-149, March.

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