Human capital and the size distribution of income in Dutch cities

Abstract

Of the three most commonly posited goals for economic policy growth, stability, and equality - far more serious research has been concerned with the analysis of growth and stability than of equality. Several reasons account for the fact that equality is one of the less developed areas of inquiry by economists. First, the whole concept of an income distribution is ambiguous and elusive from the standpoints of both comprehension and analysis. It is far easier to understand the concepts of growth as a familiar process of change and stability as fluctuations about a trend. Moreover, systematic analysis of growth and stability, whether quantitative or qualitative, tends to follow a more structured analytical tradition. Comprehension of a distribution is more difficult. Lorenz curves have clarified our understanding of the extent of inequality and permit comparisons of differences in inequality among groups, areas, or points in time. But, since they are geometrical representations, Lorenz curves are analytically awkward, particularly when causation is sought. The problem is simplified, though generality of the entire distribution is sacriticed, when attention is focused on segments of the distribution, as in analyses of the poverty population or of the rich and 'super-rich'. Second, it is more difficult to arrive at a consensus on an optimal