Distribution of Income
The distribution of income refers to how the total income in a society is divided among its members. It examines the allocation of income across different individuals or groups, often measured using metrics like the Gini coefficient. This concept is central to understanding economic inequality and social welfare within a given population.
8 Key excerpts on "Distribution of Income"
eBook - ePubInflation, Income Distribution and X-Efficiency Theory
A Study Prepared for the International Labour Office...
- Harvey Leibenstein(Author)
- 2022(Publication Date)
- Routledge(Publisher)
...On the whole, a number of authorities agree that, in general, the income distribution worsens in the early stages of development, but that it improves as development proceeds. 8 Whether this is factually true, or whether it is an artefact of the extreme data problems involved in measuring real income in the agricultural sector, is difficult to determine. It should be mentioned in passing that most relatively careful studies indicate considerable concern about the quality of income distribution data, but, despite this concern, the writers usually proceed in the attempt to measure degrees of inequality to the best of their ability. In this book we shall simultaneously be concerned with the income distribution problem in terms of the functional Distribution of Income, as well as those aspects that deal with the relatively impoverished members of society. The reason for this dual concern is not because we feel there is a clear-cut relationship between the functional distribution and the lower deciles of the size distribution, but because the main analytical ideas which we shall employ happen to have considerable bearing on the production function, and theories which explain the functional distribution on that basis, as well as a bearing on some aspects of the size Distribution of Income. To the extent possible, we will attempt to avoid judgements on the problem of income distribution as such. The main reason for this is not that it is necessarily desirable to avoid such judgements, but simply that to do so would involve a variety of philosophical issues that would detract from the type of considerations that are the main point of this book. II. Comments on the Concept of Income Distribution Income inequality is a complex and subtle idea which looks as though it is a simple one. The main reason it is frequently considered simple is because it often seems easy for people to make comparisons...
- Peter Flora(Author)
- 2017(Publication Date)
- Routledge(Publisher)
...This final distribution represents the most comprehensive meaning of consumer inequality. Redistribution refers to the process by which the primary distribution, measuring the producer inequality, is transformed gradually into the consumer inequality of the final distribution. In correspondence with the four kinds of income distributions, three types of redistributions can be distinguished. As commonly understood primary redistribution refers to changes in income distribution by direct taxes and transfer payments: both a vertical redistribution between income groups and a horizontal redistribution between equal income groups to compensate for different characteristics such as number of children or civil status. Next, total monetary redistribution embraces the effects of indirect taxes. This level must be distinguished from primary redistribution not only for statistical reasons, but because direct and indirect taxation have historically represented different methods and approaches to income redistribution. Because the provision of public goods may represent to some extent an alternative to transfer payments (see Chapter 9), it must be included at the stage of total redistribution that reflects the redistributive impact of all transactions, including differential access to these public goods. Figure 6.1 Production, Consumption and Income Inequality For an empirical assessment of the tertiary and final distribution, one has to know the consumption behaviour of income groups. Such information is only provided by sample surveys and therefore is limited to the period after World War II...
eBook - ePub- Harlan M. Smith(Author)
- 2016(Publication Date)
- Routledge(Publisher)
...It does not suffice simply to say so in so many words, because it is likely to be taken as a norm unless at least a few of its difficulties are presented. And since distribution is so important to everybody, and such concepts as the ability concept tend to be tied to the marginal productivity concept, a word about such is also needed to stimulate students to think about parts of accepted ideology—not to provide a different normative answer, but to disabuse them of the notion that economics has given a definitive answer to a question that involves a variety of ethical issues. 25. More on the Distribution of Income and Wealth The marginal productivity theory of distribution deals only with the functional Distribution of Income by purportedly explaining the pricing of productive services in the factor of production markets. That pricings however done and explained, is only the first step in determining the income of any person, household, or family. The textbooks usually say that that income, the personal or size Distribution of Income, is determined by the pricing of productive services and the distribution of ownership of such productive services. And so it is. But there is no textbook explanation of the distribution of ownership of productive services, as important as that is. The reason for the omission is that there is no economic theory to explain it. Only history explains it, that is, describes its evolution. Clearly it is partly a result of the operation of an economy over time, the results cumulating. As popular ideas have it, not incorrectly, it takes money to make money, so to some extent inequality tends to grow. “Shirtsleeves to shirtsleeves in three generations,” another popular saying, indicates that excess stupidity can crop up in any family line at times. It can happen, but even moderate prudence would enable the wealthy to become wealthier if their gambles were confined to half their wealth while the rest was invested safely at compound interest...
eBook - ePub- Kevin Deane, Elisa van Waeyenberge, Kevin Deane, Elisa van Waeyenberge(Authors)
- 2020(Publication Date)
- Bloomsbury Academic(Publisher)
...7 HOW IS INCOME DISTRIBUTED? Jo Michell Introduction In the two and a half centuries since Smith wrote The Wealth of Nations, economists’ interest in income distribution has waxed and waned. The topic has drifted in and out of fashion, driven by historical developments and shifting theoretical and political sands. The Classical thinkers attempted to explain how income was divided among capitalists, landlords, and workers – the classes described by Smith as the ‘three great, original, and constituent orders of every civilised society’ (1776/1976, p. 265). Ricardo declared Political Economy to be ‘an enquiry into the laws which determine the division of the produce of industry among the classes who concur in its formation’ (1820, pp. 278–279). Marx recast Ricardo’s model as a system driven by conflict between workers and capitalists over the Distribution of Income. The Marginalist revolution of the 1870s replaced the Classical idea of a surplus accruing to capitalists and landowners after wages are paid, with the factor rewards theory of Jevons, Clark, Marshall, and others. For the Marginalists, income distribution is determined by the relative contribution to production provided by each factor of production (labour, land, and capital). The income received by the owners of these factors is determined in competitive markets in the same way as the price of goods. In return for the use of factors of production, owners receive a reward equal to the marginal contribution of that factor to the production of utility-providing consumption goods...
eBook - ePub- Stanley Bober(Author)
- 2016(Publication Date)
- Routledge(Publisher)
...The latter, to reiterate, then considers these costs in conjunction with the particular technical requirements needed of these inputs to determine what combination of capital and labor inputs to employ. And this gives rise to differences in earned income across the population, which can be aggregated into an overall income distribution picture with regard to the earnings of labor and that of capital. We are going to consider the basic mechanics involved for such a market-determined income distribution in order to have a clear base from which to mount a critique of this conventional approach and propose an alternative understanding, similar to the way we handled consumer-demand theory. The essential point then for the orthodox explanation is that the Distribution of Income is determined by the price at which the household (or each individual) can sell, in the competitive marketplace, the services of the factors of production which it possesses. The whole matter of distribution is simply a facet of price theory; that is, one derives a theory of distribution as incidental to the pricing mechanics, in that distribution is determined by conditions of exchange. There is no need then for a particular analysis or understanding of the “reward” to each factor of production; one need not relate or justify the payment to an input as stemming from its particular role in the production process and as an outgrowth of the social and technical relationships between people who reside behind the faceless term of “inputs” or “factors.” In conventional theory the distribution of the output does not relate to the existence of social classes in society with an inherent conflict between them that is grounded in a historical context...
eBook - ePub- Richard P. F. Holt, Steven Pressman(Authors)
- 2001(Publication Date)
- Routledge(Publisher)
...To make such a critique persuasive requires a clear theoretical restatement, going beyond the usual appeal to institutions, politics, and history. But it also requires a persuasive empirical substantiation, one capable of accounting for the movement of inequality through time and in different national settings. Post Keynesians need to show that the personal Distribution of Income is linked to the flow of economic profits as a share of national income, and therefore to the spending decisions of capitalists and their macroeconomic ramifications. They need to show this, not only for the US, but for a wide range of countries. The Post Keynesian theory of income distribution is not specific to the US. For this we need more and better data, particularly better measures of economic inequality through time, so that the relationship between inequality and macroeconomic phenomena can be tracked. A macroeconomic theory of distribution requires macroeconomic measures of distribution. Fortunately, this condition can be met. The requisite information is available in the historical record, over long time spans and for many countries. Until recently, however, its potential for this purpose has rarely been recognized and almost never exploited (see Galbraith and Berner, 2001). Toward a macroeconomic theory of personal income distribution Consider a simple setting: an economy with one production factor (labor), and firms with identical rising marginal production costs, but distinct markets. One firm faces a competitive, perfectly elastic demand curve and prices at marginal cost. Another firm faces a downward-sloping demand curve and sets output so that marginal revenue equals marginal cost, with price taken from the corresponding point on the demand function [as first stipulated by Joan Robinson (1933)]...
eBook - ePub- Martin Bronfenbrenner(Author)
- 2017(Publication Date)
- Routledge(Publisher)
...CHAPTER THREE Topics in Personal Income Distribution Statistical Measurement of Inequality 1. To measure the degree of inequality of a personal income distribution—a frequency Distribution of Incomes by size—we have mentioned two statistics, the standard deviation and the coefficient of variation, defined as the standard deviation divided by the arithmetic mean. (To measure the degree of equality, we could have used the reciprocals of the same statistics.) The attraction of these particular statistics is their simplicity, but they are not widely used in practical work. The coefficient of variation, for example, takes no account of the skewness of the income distribution; it has a lower bound (at zero) but no finite upper bound; and it is influenced by extreme values. Of the infinite variety of conceivable measures of personal income equality and inequality, many of those used in Western Europe and America have been compared and summarized by Bowman. 1 The most familiar of these are the Pareto α and the Gini coefficient of concentration, R. We consider these in order. 2. Pareto’s “Law of Income Distribution” appeared in 1897 in his Cours d’économie politique; 2 at that time, supporting statistical data were still widely scattered, unreliable, and difficult to obtain. Pareto’s generalization relates only to the upper tail of the personal income distribution, to values above the mode. Its overall usefulness is reduced by its omission of the lower income brackets. Pareto’s law is in two parts, one relating to the mathematical form of the income distribution’s upper tail and the other to the arithmetical value of one of its coefficients. Let F be a level of income (above the mode), and let N be the proportion of income receivers with incomes equal to or greater than Y...
eBook - ePubInequality and Stratification
Race, Class, and Gender
- Robert A. Rothman(Author)
- 2015(Publication Date)
- Routledge(Publisher)
...In one sense the income gap can be seen as a working out of the American Dream, with wealth going to those who work the hardest—wealth is a just reward for effort and talent. And yet, most Americans express some reservations about the current distribution of money and wealth. A full 62 percent of Americans feel that money and wealth “should be more evenly distributed among a larger percentage of the people” (Gallup Poll, 1996). The rest feel that current economic patterns are “fair” or have no opinion. Forty-nine percent of Americans in one poll went so far as to agree that the income gap was morally wrong (Smiley, 2000). As would be expected, opinions on the fairness of the current system are shaped by class, race, and gender. Women are somewhat less likely to endorse the fairness of the current situation, as are minorities. Judgments of fairness are directly related to the size of income, with one-half of the people in families earning more than $40,000 seeing the distribution of financial resources as fair, with the percentages declining to only 16 percent of those in the $10,000 or less income bracket. It is not surprising that perceptions of the fairness of the stratification system are defined by the size of the rewards people earn from the existing system. Key Concepts annual income chronic poverty deinstitutionalization earnings gap homelessness living wage movement net worth poverty poverty thresholds working poor Suggested Reading EileenApplebaum, AnnetteBernhardt, and Richard J.Murnane, eds. Low-Wage America. New York: Russell Sage, 2003. The authors in this collection show how technology and globalization have prompted employers to cut wages in order to compete, although they also provide examples of firms that offer decent pay and benefits. DennyBraun. The Rich Get Richer: The Rise of Income Inequality in the United States and the World, 2nd ed. Chicago: Nelson-Hall, 1997...
