Abstract
In a national economy, the price system determines both resource allocation and the income distribution. The imputation to the factors of production of the mass of income associated with an economy’s output determines its distribution by factor shares, or functional income distribution. This mainstream of research follows Ricardo’s (1817) contribution. Another mainstream of research was initiated by Pareto (1895, 1897), and deals with the distribution of a mass of income among the members of a set of economic units (family, household, individual), considering either the total income of each economic unit or its disaggregation by source of income, such as wages and salaries, property income, self-employment income, transfers, etc. This type of inquiry deals with distribution by size of income, or personal income distribution, and the quantitative assessment of the relative degree of income inequality among the members of a given set of economic units. Such inquiries provide basic quantitative information in support of a comprehensive research strategy on income distributions, including causal explanations for social welfare and policy.
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