Full text: The Personal Distribution of Income

Footnotes to p.4 
Although Champernowne*s theory is more complicated than the 
simple model which takes its place in the above reasoning, 
we can easily extend the conclusions: With Champernowne, the 
promotion is stochastic, with probabilities'of non-promotion 
and demotion. In this more general case p in the above solution 
has to be replaced by b which is the root of the characteristic 
equation of the matrix*?^ Oc -h & - 
, The Pareto coefficient in the simple case is - ^ £ , the ratio 
of the parameters of the two exponential distributions; in the 
more general case of Champernowne the Pareto coefficient is 
X n Id 
~ —— . b could be regarded as the parameter of an age dis- 
tribution, if the classes (states of the system) are regarded 
as age classes j l /u feu T<r ^ ic-cct ^ r u 
(,J cC o/s •yir'S’i fe 
2) Champernowne apparently did not know Yule's paper: It was 
H.Simon's merit to have brought it to the attention of 
economists; unfortunately he reproduced it in a form which 
obscured its essence, which is the interplay of the two ex 
ponential distributions, i.e. of two stochastic processes.

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