10 Equation (f) shows that the Pareto form of the wealth distribution is reproduced in the income distribution, provided the independence condition is fulfilled, and y £: w. We have now to face the fact that the rate of return on wealth will in reality not be Independent of wealth. The cross-classifi cations of wealth and income of wealth owners (for Holland, Sweden) show that mean Income is a linear function of wealth, the regression coefficient being smaller than unity. We can easily take account of that by defining a conditional rate of return density or rather its mirror function as j' (kw-y), where k is the regression coefficient of y on w. Assuming that the variance and the higher moments of kw-y) are independent of w we can proceed as before: ~oCCJ~ 9 (y) - — po (s. f 1 f (kw-y)e dw « Crr It may be noted that the condition kw y is more restrictive than the former condition w^ y. The result is now that the Pareto shape of the wealth distribution is reproduced in the income distribution, but with a larger Pareto