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On the Measurement of Functional Income Distribution

Author

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  • Marco Ranaldi

    () (CES - Centre d'économie de la Sorbonne - UP1 - Université Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique, PSE - Paris School of Economics)

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," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-01379229, HAL.
  • Handle: RePEc:hal:cesptp:halshs-01379229
    Note: View the original document on HAL open archive server: https://halshs.archives-ouvertes.fr/halshs-01379229v4
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    References listed on IDEAS

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    1. A. B. Atkinson, 2009. "Factor shares: the principal problem of political economy?," Oxford Review of Economic Policy, Oxford University Press, vol. 25(1), pages 3-16, Spring.
    2. Atkinson, A B, 1997. "Bringing Income Distribution in from the Cold," Economic Journal, Royal Economic Society, vol. 107(441), pages 297-321, March.
    3. Frédéric Chantreuil & Alain Trannoy, 2013. "Inequality decomposition values: the trade-off between marginality and efficiency," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 11(1), pages 83-98, March.
    4. Graham Pyatt & Chau-nan Chen & John Fei, 1980. "The Distribution of Income by Factor Components," The Quarterly Journal of Economics, Oxford University Press, vol. 95(3), pages 451-473.
    5. Shorrocks, A F, 1982. "Inequality Decomposition by Factor Components," Econometrica, Econometric Society, vol. 50(1), pages 193-211, January.
    6. Bourguignon, Francois, 1979. "Decomposable Income Inequality Measures," Econometrica, Econometric Society, vol. 47(4), pages 901-920, July.
    7. Atkinson, Anthony B., 1970. "On the measurement of inequality," Journal of Economic Theory, Elsevier, vol. 2(3), pages 244-263, September.
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    Citations

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    Cited by:

    1. Roberto Iacono & Marco Ranaldi, 2018. "Sources of Inequality in Italy," Working Papers 479, ECINEQ, Society for the Study of Economic Inequality.
    2. Giacomo Gabbuti, 2018. "Labour Shares and Income Inequality: Insights from Italian Economic History, 1895-2015," HHB Working Papers Series 13, The Historical Household Budgets Project.

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