Fabio Clementi (Department of Public Economics, University of Rome 'La Sapienza') Mauro Gallegati (Department of Economics, Università Politecnica delle Marche)
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We analyze three sets of income data: the US Panel Study of Income Dynamics (PSID), the British Household Panel Survey (BHPS), and the German Socio-Economic Panel (GSOEP). It is shown that the empirical income distribution is consistent with a two-parameter lognormal function for the low-middle income group (97\%-99\% of the population), and with a Pareto or power law function for the high income group (1\%- 3\% of the population). This mixture of two qualitatively different analytical distributions seems stable over the years covered by our data sets, although their parameters significantly change in time. It is also found that the probability density of income growth rates almost has the form of an exponential function.
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Paper provided by EconWPA in its series Microeconomics with number
0505006.
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