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 
46*ft 
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 
form: 
y\/o 
W t 
V 
q (I) - cdX 
j* (kWM4-/ 0 -Y) if*®*' d¥ ' 
p) exp -F f (Y4$(o)J , 
(5) 
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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