Mechanical Model of Personal Income Distribution
A microeconomic model is developed, which accurately predicts the shape of personal income distribution (PID) in the United States and the evolution of the shape over time. The underlying concept is borrowed from geo-mechanics and thus can be considered as mechanics of income distribution. The model allows the resolution of empirical and definitional problems associated with personal income measurements. It also serves as a firm fundament for definitions of income inequality as secondary derivatives from personal income distribution. It is found that in relative terms the PID in the US has not been changing since 1947. Effectively, the Gini coefficient has been almost constant during the last 60 years, as reported by the Census Bureau.
References listed on IDEAS
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- Adrian Dragulescu & Victor M. Yakovenko, 2001.
"Exponential and power-law probability distributions of wealth and income in the United Kingdom and the United States,"
cond-mat/0103544, arXiv.org, revised Mar 2001.
- Drăgulescu, Adrian & Yakovenko, Victor M., 2001. "Exponential and power-law probability distributions of wealth and income in the United Kingdom and the United States," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 299(1), pages 213-221.
- A. Dragulescu & V. M. Yakovenko, 2002. "Exponential and power-law probability distributions of wealth and income in the United Kingdom and the United States," Computing in Economics and Finance 2002 125, Society for Computational Economics.
- Neal, Derek & Rosen, Sherwin, 2000. "Theories of the distribution of earnings," Handbook of Income Distribution, in: A.B. Atkinson & F. Bourguignon (ed.), Handbook of Income Distribution, edition 1, volume 1, chapter 7, pages 379-427 Elsevier.
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