Full text: The Personal Distribution of Income

12 
income. In other words, the mean wealth in low income classes, 
as measured by the datajsrhich we have on the basis of tax assessments 
very strongly verstates the real mean wealth, and this the m re 
the 1 wer the income 
There is no pr of f c ' ree that a me curvilinearity 
w uld n t remain even if full wealth data were available. Th re 
may oven be the retical reas ns f r that, as will be h >m later. 
One reas n for linea ity >f the presumed full data sh >uld be 
menti-ned* It is rather queer that n n-linearity affects njy 
one of the regression lines and the other is perfectly linear. 
Only the truncati n f wealth data gives a plausible explanation 
of this c ntrast between the two regression linea. 
Empirical datai Holland and Sweden. 
The cross •.classification of wealth ad income available 
for the Netherlands and Sweden, will now be discussed it-the light 
of the theory contained in equation . ‘'Verification" can 
hardly be expected* The rate of return explanation can not nearly 
explain the income of prope ty owners fully, since a large part of 
it is earned income. Apart from other statistical difficulties 
it must be kept in mind that the ? rtto coefficient is always 
m re or less arbitrary, since it demands on the range of inc -r..e 
or wealth classes included when you measure it. -oren inconclusive 
data, h wevar, are better than speculating in the v id. 
An evidence n which I rely heavily is the iinear and 
fairly regul r character f the regression :.f ean inc > e n viealth 
( fig 1). The regression c efficient ie in most cases armad 2/j, 
but it hay be as low as l/2 . Whether the higher moments of inc- e 
are independent of wealth is n>t easy t decide While the 
variance, in t e Swedish data, increases in the high r wealth classes 
this can plausibly be explained by the increase in the range of 
these classes ( the last but >ne wealth class has a range ab ht 
f ur times aa great as the lower wealth blasseo). The same 
fact is relevant for the comparis>n of the conditional distribution 
of inc me in the vari us wealth classes* They all have a 1 arete tail, 
the art to coefficient being markedly lower in the lost two or three 
wealth classes than in the other s. This, again, may be 
plausibly explained by the gre ter range of these high wealth 
size classes.
	        

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