Is the Distribution of Income Compatible with a Stable Distribution?
AbstractMandelbrot (1961) proposed to apply the class of Pareto-Levy distributions - which belong to the Stable distributions - as a framework for modelling income distributions. He also presented theoretic arguments in favor of the Pareto-Levy distributions. In this paper we provide additional theoretical justification for this class of distributions. We also use micro data on individual market income to estimate the parameters of a Pareto-Levy distribution. Several estimation methods have been applied. The estimated Pareto-Levy distribution appears to fit the data well.
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Bibliographic InfoPaper provided by Research Department of Statistics Norway in its series Discussion Papers with number 246.
Date of creation: Jan 1999
Date of revision:
Stable distributions; Pareto-Levy distributions; Income distributions;
Find related papers by JEL classification:
- C13 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Estimation: General
- D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
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