The Personal Distribution of Income

Steindl, Josef

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Document type:: Works

Collection:: Josef Steindl Collection

Title:: The Personal Distribution of Income

Author:: Steindl, Josef

Scope:: Kopie eines Typoskripts mit handschriftlichen Anmerkungen, insgesamt 27 Seiten mit originalen handschriftlichen Anmerkungen auf Seite 23 (nummeriert als Seite 18)

Year of publication:: 1972

Source material date:: August-September 1972

Language:: English

Related work:: Steindl, Josef: The Personal Distribution of Income. In: Steindl, Josef: Economic Papers 1941-88. London: Macmillan, 1990, S. 356-371

Topic:: Stochastic processes and size distribution

Shelfmark:: S/M.52.9

Access:: Free access

7 17. In a further stage we should cease to take the wealth# distribution as given and instead treat wealth and income as joint variables in a process evolving over ±±as the generations. We should continue to regardthe influence of slcrwiy accumulating wealth and other stocks on the current income as a dominant feature of the process but, trying to includethe preceding history of accumulation, we should now also recognise that in the course of time the income acts on the wealthy not* only in so far as it arises from wealth as a return and is (partly) re-invested, but also insofar as anew wealth is formed from earned income in favorable circumstances and after_a lapse of time required for accumulation. That means that income and wealth are linked by two hands of relationsjOne is the rate of return which links the current income of property owners to their wealth, the other is the relation between (unearned and) earned income of the past to the accumulation of new wealth, in otherwords, the propensity to save. J -n so far as the past income is in practice fairly strongly correlated with present income, the present earned income appears to have an effect on the wealth which corresponds to the savings relation. The influence of wealth on income via ihe rate of return is the subject to be treated first over the next few pages. The dependence of income on wealth In the following we shall consider income as flowing from wealth. This applies stricily to what we call unearned income. The reader may think of that in the first place,but h e has to be prepared for a more far reaching and wider interpretation later on; in fact, in praiice we cahhot easdidy separate unearned and earned income, and the difficulty is perhaps greater than one that could be overcome by adequate data ( especially in the case of unincorporated business ). Instead of the matrix of income transitions ased by Champernowne we have to imagine an analogous matrix Wealth-income whichshows for each amount of swealth the probability of different I incomes. n x he basis of the analysis is thud the conditional distribution of income, given the wealth. Economically speaking this is the probability of a certain rate of return to wealth or profit rate. From this, if we know it, we can derive the distribution of income 7 >

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