Full text: Konvolut Wealth and Income Distribution 1

In reality, profits in excess of 1oo % may exist. In 
the caoe where k <1 we can,however, always ensure 
that the conditions are net and (4) remains applicable 
As before, we rotate the diagonal round a poii 
it is parallel to the regression line (see fig. 
and along that line the distribution is truncated. If 
we choose the point appropriately, we can reduce the 
number of incomes truncated. In algebraic terms, we 
define W* » Vi^W©t and we tfrite (4) in the following 
W t 
q (I) - cdX 
j* (kWM4-/ 0 -Y) if*®*' d¥ ' 
p) exp -F f (Y4$(o)J , 
kV'> &Wfl\ 
hU / ^>(y f-wWe] 
The resulting income distribution differs only by a 
constant factor from (4). Since the transformation (5), 
however, is only applicable to wealth not smaller than 
V 0 , it can be intuitively seen that the income distrib 
ution will start only at the level Y « V 0 to cbnfftrm to 
the Pareto Law. In other words, the Pareto law will 
always be projected from wealth on to income, but\de- 
peading on the shape of the regression line, the ih^come 
distribution will confirm to linearity only from a mbre

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