Income Distribution: Line of Reasoning (Fassung 2)

Steindl, Josef

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Document type:: Works

Collection:: Josef Steindl Collection

Title:: Income Distribution: Line of Reasoning (Fassung 2)

Author:: Steindl, Josef

Scope:: Typoskript mit handschriftlichen Anmerkungen und Anstreichungen, 5 Seiten

Year of publication:: 1975

Source material date:: [15.08.1975]

Language:: English

Note:: Eine weitere Fassung dieses Typoskripts findet sich unter Signatur S/M.70.1. Zusatz zum Titel in Klammer fingiert.

Topic:: Stochastic processes and size distribution

JEL Classification:: D31 [Personal Income, Wealth, and Their Distributions]

Shelfmark:: S/M.70.2

DOI:: https://doi.org/10.48671/nls.js.AC14446213

Bo to that the two empiric 1 rel ti no ere of an entirely different kind. One hot rrainer the top salary in various c.nspanies. The other determines the salary 'jQZ’rirGroouV.ng to the frequency with whi'oh'it i3 paid in a certain c n. any ( the r ore nat r 1 ray of putting it would be IT - m* C" 5 •imongs point b-cafor in that with ..is expIon-.ti n the oranoior is the same in thetwo very different e uati ns .hich .squares with the empirical be?: resu' t. Simons th ory follows the pattern of the usual Pareto cxt>lan tion • the two exponential distributions - but it is unsatisfactory because, like Roys omplanaii n of 1 .normal distributi n , it does not contain the tire ole nnt. e auot got history iito it.' A way y which it can enter* the sise ,f orqanioati no prows with time. Incidentally the oiyo distributi. n of oonpanlos in already pareto distributed, therefore the top sal -:ry would bo do •istribute- , sindo it is a linear functi n of t c tide. Elaboration of the algebra* Sub3titutiaG froQ 3 in 7* 1 r In b . „ , lnb in 0 *> r 1 ' :— In I« + In n In b In n ( In - constant] ) + constant 2 In C 1 «* ( In If + In S -constant.) + onsiant,, In n * «• The results of -imon imply that th e same parameter In b/ In n occurs in both relations and the fact that the parameter is err irlcdlly the same servos him as confirr ation. Ho has inplioitly assumed tha the -ammeter is the same for all companies, that is implied in his argument. '0 stuck to this assumption in e.crivin the gneral distribution 9 which can c more conventionally put as follows* In 35 » Tn‘"§ In C' - In 3 +constant1 - ^ cknstan 12 In n IT C» s" exp(oonstant1 -c nctenth ) If wo n w mix the above distribution of V. with the fro uoncy function of S, the sise distributi n wo ov hi to get the frequency ;f sal rior: for the ?h- le industry. The distribution f S is Pareto.

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