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MECHANICAL MODEL of PERSONAL INCOME DISTRIBUTION

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  • Kitov, Ivan

Abstract

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.

Suggested Citation

  • Kitov, Ivan, 2009. "MECHANICAL MODEL of PERSONAL INCOME DISTRIBUTION," MPRA Paper 13422, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:13422
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    References listed on IDEAS

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    1. 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.
    2. 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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    Cited by:

    1. Fix, Blair, 2018. "A Hierarchy Model of Income Distribution," Working Papers on Capital as Power 2018/02, Capital As Power - Toward a New Cosmology of Capitalism.
    2. Ivan O. KITOV & Oleg I. KITOV, 2010. "Dynamics Of Unemployment And Inflation In Western Europe: Solution By The 1- D Boundary Elements Method," Journal of Applied Economic Sciences, Spiru Haret University, Faculty of Financial Management and Accounting Craiova, vol. 5(2(12)/Sum), pages 94-113.
    3. Gerencia de Riesgo Asobancaria - CIFIN, 2011. "Estimación de la Carga Financiera en Colombia," Temas de Estabilidad Financiera 056, Banco de la Republica de Colombia.
    4. Ivan O. Kitov, 2009. "Does economics need a scientific revolution?," Papers 0904.0729, arXiv.org.

    More about this item

    Keywords

    personal income; modelling; mechanics; the US;

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • E01 - Macroeconomics and Monetary Economics - - General - - - Measurement and Data on National Income and Product Accounts and Wealth; Environmental Accounts
    • C81 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs - - - Methodology for Collecting, Estimating, and Organizing Microeconomic Data; Data Access
    • D01 - Microeconomics - - General - - - Microeconomic Behavior: Underlying Principles
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development

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