Full text: Konvolut Wealth and Income Distribution 1

II, Earned Income 
In dealing with unearned income, wealth had been used 
as a state variable. It is natural to extend this idea. 
Incone 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 pn on 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 les3 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 dob), and the quality of

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