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Evidence for the Independence of Waged and Unwaged Income, Evidence for Boltzmann Distributions in Waged Income, and the Outlines of a Coherent Theory of Income Distribution

Author

Listed:
  • Geoff Willis

    (RiskAMT)

  • Juergen Mimkes

    (University of Paderborn)

Abstract

Two sets of high quality income data are analysed in detail, one set from the UK, one from the USA. It is firstly demonstrated that both a log-normal distribution and a Boltzmann distribution can give very accurate fits to both these data sets. The absence of a power tail in the US data set is then discussed. Taken in conjunction with detailed evidence from the UK and Japanese income data, a strong case is made for the mathematically separate treatment of waged and unwaged income. The authors present a case for preferring the use of the Boltzmann distribution over the log-normal function, this leads to a brief review of the work of a number of researchers, which shows that a coherent theory for the distribution of all income can be postulated.

Suggested Citation

  • Geoff Willis & Juergen Mimkes, 2004. "Evidence for the Independence of Waged and Unwaged Income, Evidence for Boltzmann Distributions in Waged Income, and the Outlines of a Coherent Theory of Income Distribution," Microeconomics 0408001, EconWPA.
  • Handle: RePEc:wpa:wuwpmi:0408001
    Note: Type of Document - pdf; pages: 28
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    References listed on IDEAS

    as
    1. Jean-Philippe Bouchaud & Marc Mezard, 2000. "Wealth condensation in a simple model of economy," Science & Finance (CFM) working paper archive 500026, Science & Finance, Capital Fund Management.
    2. Bouchaud, Jean-Philippe & Mézard, Marc, 2000. "Wealth condensation in a simple model of economy," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 282(3), pages 536-545.
    3. Wataru Souma, 2000. "Universal Structure of the Personal Income Distribution," Papers cond-mat/0011373, arXiv.org.
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    Citations

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    Cited by:

    1. Arnab Chatterjee & Bikas K Chakrabarti, 2005. "Ideal-Gas Like Markets: Effect of Savings," Papers physics/0507136, arXiv.org, revised Jul 2005.
    2. Chakrabarti, Anindya S. & Chakrabarti, Bikas K., 2010. "Statistical theories of income and wealth distribution," Economics - The Open-Access, Open-Assessment E-Journal, Kiel Institute for the World Economy (IfW), vol. 4, pages 1-31.
    3. F. Clementi & M. Gallegati & G. Kaniadakis, 2007. "κ-generalized statistics in personal income distribution," The European Physical Journal B: Condensed Matter and Complex Systems, Springer;EDP Sciences, vol. 57(2), pages 187-193, May.
    4. Venkat Venkatasubramanian, 2010. "What is Fair Pay for Executives? An Information Theoretic Analysis of Wage Distributions," Papers 1002.2269, arXiv.org.
    5. N. J. Moura & M. B. Ribeiro, 2009. "Evidence for the Gompertz curve in the income distribution of Brazil 1978–2005," The European Physical Journal B: Condensed Matter and Complex Systems, Springer;EDP Sciences, vol. 67(1), pages 101-120, January.
    6. Fabio Clementi & Mauro Gallegati, 2005. "Pareto's Law of Income Distribution: Evidence for Grermany, the United Kingdom, and the United States," Microeconomics 0505006, EconWPA.
    7. Geoff Willis, 2004. "Laser Welfare: First Steps in Econodynamic Engineering," Microeconomics 0408003, EconWPA.

    More about this item

    Keywords

    Income distribution; log-normal; Boltzmann;

    JEL classification:

    • D1 - Microeconomics - - Household Behavior
    • D2 - Microeconomics - - Production and Organizations
    • D3 - Microeconomics - - Distribution
    • D4 - Microeconomics - - Market Structure, Pricing, and Design

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