I'i
19
II* Earned Income
In dealing with, unearned income, wealth, had been used
as a state variable. It is natural to extend this idea.
Income depends also on education, training, status,
family connections etc, which are in a sense inherited
like wealth, and result from a sort of "investment" of
income by preceding generations. On an abstract level
we can speak of "income potential" which embodies all
the forms of "investment" mentioned. There are certain
differences between the various forms of income poten
tial: Education is passed on to the children as they
grow up, while the inheritance of wealth has usually
to wait for the death of the parent.
It is tempting to speculate on an equalization of the rate
of return between the different forms of investment; this
would make it easy to generalize results on the distri
bution of income. We know, however, that equalization
of return is not likely. And we must beware of drawing
to close a parallel between material wealth and
educational investment. It seems that beyond a certain
range it is less and less easy to increase educational
investment further. Of course, there is no absolute
limit: Indeed there are always possibilities of further
investment (in learning on the Job), and the quality of