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Evidence for a Power Theory of Personal Income Distribution

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  • Fix, Blair

Abstract

This paper proposes a new ‘power theory’ of personal income distribution. Contrary to the standard assumption that income is proportional to productivity, I hypothesize that income is most strongly determined by social power, as indicated by one’s position within an institutional hierarchy. While many theorists have proposed a connection between personal income and power, this paper is the first to quantify this relation. I propose that power can be quantified in terms of the number of subordinates below one’s position in a hierarchy. Using this definition, I find that relative income within firms scales strongly with hierarchical power. I also find that hierarchical power has a stronger effect on income than any other factor for which data is available. I conclude that this is evidence for a power theory of personal income distribution.

Suggested Citation

  • Fix, Blair, 2017. "Evidence for a Power Theory of Personal Income Distribution," Working Papers on Capital as Power 2017/03, Capital As Power - Toward a New Cosmology of Capitalism.
    • Handle: RePEc:zbw:capwps:201703
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    4. 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.

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    income distribution; hierarchy; power;
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