Theory Of Income Distribution Research Articles

Generalized Pareto distribution and income inequality: an extension of Gibrat's law

<abstract> <p>Motivated by empirical observations, we proposed a possible extension of Gibrat's law. By applying it into the random growth theory of income distribution, we found that the income distribution is described by a generalized Pareto distribution (GPD) with three parameters. We observed that there is a parameter $ \eta $ in the GPD that plays a key role in determining the shape of income distribution. By using the Kolmogorov-Smirnov test, we empirically showed that, for typical market-economy countries, $ \eta $ is significantly close to 0, indicating that the income distribution is characterized by a two-class pattern: The bottom 90% of the population is approximated by an exponential distribution, while the richest 1%~3% is approximated by an asymptotic power law. However, we empirically found that in China during the period of the planned economy and the early stages of market reform (from 1978 to 1990), $ \eta $ deviated significantly from 0, indicating that the bottom of the population no longer conformed to an exponential distribution.</p> </abstract>

Book Review "The Economics Anti-Textbook: A Critical Thinker’s Guide to Microeconomics Authors: Rod Hill and Tony Myatt"

The book titled "The Economics Anti-Textbook: A Critical Thinker’s Guide to Microeconomics" by Rod Hill and Tony Myatt offers a thorough critique of mainstream microeconomic theories typically presented in traditional textbooks. Structured with a unique approach, each chapter is divided into two sections: the standard text and the critical text title. This dual presentation provides readers with an insightful comparison, where the authors systematically challenge and question the assumptions and narratives commonly found in economic education. The book covers a wide range of topics, including market structures, efficiency, externalities, income distribution, government intervention, and globalization. Notably, the authors debunk the idealization of perfect competition, underscore the importance of externalities and market failures, and scrutinize the marginal productivity theory of income distribution. Furthermore, they analyze the impact of government policies on income redistribution and assess the implications of global trade and globalization. Throughout the book, the authors advocate for a more nuanced and realistic understanding of economic phenomena, urging readers to incorporate ethical considerations, environmental concerns, and power dynamics into their economic analyses. This review provides a comprehensive overview of the book's central themes, emphasizing its unique structure and critical perspective on traditional economic teachings.

Monetary Policy and Income Distribution: The Post-Keynesian and Sraffian Perspectives

ABSTRACT This paper examines the post-Keynesian and Sraffian perspectives on the relationship between monetary policy and income distribution, highlighting their endogenous demand-led money approach and rejection of the neutrality of interest rates, and monetary policy as tool of redistribution among social classes. Both approaches acknowledge that the central bank can influence interest rates and hence, the functional distribution of income. These shared ideas recognize the political nature of interest rates and the distributive impacts of monetary policy. Although all are crucial common points, some differences persist; PK theory often emphasizes the impact of monetary policy on rentiers vs. non-rentier classes, while Sraffians focus more on wage earners vs. non-wage earners. Further, while PK theorists advocate for alternative monetary policy rules, Sraffians favor discretionary policy tailored to each economy's unique institutional framework. The paper concludes by suggesting that these shared critical conceptions, despite minor differences, should stimulate collaborative efforts to further develop heterodox theories of monetary policy and income distribution.

Analysis on the Path of Continuous Reconstruction of Urban Villages in Shenzhen from the Perspective of Integration of Industry and City

As an international metropolis, Shenzhen is grappling with increasingly strained land resources after years of development. At present, the new construction land that can be developed is very scarce, shifted the city into the secondary urbanization stage with the development of stock land as the main factor. As the main source of Shenzhen's stock land, urban village land is of great significance to the construction planning of the integration of industry and city. However, a large number of urban village land managed by community joint-stock cooperative companies involves historical issues, illegal and inefficient use, complicating the secondary development of Shenzhen's stock land. The application of the Theory of Urban Land Value-added Income Distribution reveals a decreasing number of urban village projects meeting the threshold for Urban Renewal. Simultaneously, the commercial return rate of Land Preparation and Interest Coordination is declining, posing challenges to the large-scale continuous transformation of urban villages in Shenzhen. In order to solve the dilemma of urban village reconstruction caused by the complex Dual Land Structure in Shenzhen, based on the analysis of Urban Renewal and Land Preparation Theory, this paper innovatively proposes the mode of "Industrial Preparation + Urban Renewal", which is consistent with the planning basis of the integration of industry and city in Shenzhen. Through the project of "Longhua Meiguan Innovation Corridor Industrial Block", this paper analyses in detail how to coordinate and promote Industrial Preparation and Urban Renewal, how to simplify the process of dealing with the historical issues of land on the basis of respecting historical objective facts, and how to optimize the transformation process to realize the decentralization in the theory and practice of continuous transformation of villages in cities. In this way, the legal land indicators of Urban Renewal and Land Preparation can be complemented, the process of approval and negotiation can be optimized, and the overall development of the project can be increased on the premise of lower legal land indicators, so as to realize the balance of interests among all parties and the overall planning of the integration of industry and city.

Efficiency of Islamic Income Allocation and Distribution among MSMEs in Pentol Bakar Pacet, Mojokerto

Islamic Allocation Efficiency means that no individual can increase his utility without reducing other uses. Islamic allocation efficiency does not allow increasing personal welfare which can cause the welfare of others to decrease. Income Distribution in Islam refers to the distribution of existing assets, both private and public, to the people who are entitled to receive them. One of the goals to be achieved by distributing Islam is a social goal, meeting the needs of groups in need and enlivening the principle of solidarity in Islamic society so that society can live in prosperity. This research uses descriptive qualitative research. Data collection was obtained from interviews and field observations as well as various reading materials, both journals and books. This research resulted in the MSMEs business actors of Pentol Bakar (Grilled Pentol) Pacet being able to be said to be efficient because the allocation of income received from both employees and bosses without the bosses and employees being harmed was not wronged by the MSMEs business actors of Pentol Bakar Pacet in accordance with the theory of income distribution in Islam because there was no efforts to improve the welfare of others over the suffering of others because the income received by employees is greater than what the staff earns. There is also an aspect of justice because in this case no one is harmed by this system, it’s just that employees must continue to optimize their work in order to earn more income. MSMEs actors of Pentol Bakar Pacet are in accordance with Islamic allocation efficiency.

Labor Productivity, Real Wages, and Employment in OECD Economies

This work investigates the relationship between labor productivity (LP), real wage (RW), and employment (EMP). The paper's main goal is to test competing theories of growth and income distribution. Standard theory predicts that RW should increase following increases in LP. Alternative theories and efficiency wage theories suggest that the distribution causes changes in LP. Theory delivers ambiguous predictions regarding the ultimate effects on EMP, which can be either negative if factor substitution prevails or positive if higher RW and LP generate additional aggregate demand and, therefore, EMP. I study a panel of 25 OECD economies by performing single and multi-equation approaches. My first key result is a positive two-way association between LP and RW, supporting the induced technical change and efficiency wages theories over the marginal productivity theory. My second relevant finding is that EMP is weakly exogenous, suggesting that OECD countries have been labor-constrained for the period under analysis.

Analisis Tingkat Kesenjangan Bantuan Pangan Non Tunai (BPNT) dan Dampaknya terhadap Daya Beli Masyarakat Muslim

Research on Non-Cash Food Assistance (BPNT) from the aspect of equity, it turns out that no one has done it yet. Therefore, this thesis is here to discuss this matter, and herein lies the difference from the results of previous research on BPNT. In researching BPNT from the aspect of equity, a quantitative approach is used for the methodological aspects and Islamic economics for the scientific aspects. To realize these two approaches, an equity model is used in discussing the gap in Non-Cash Food Assistance (BPNT) in Cenrana District, Bone Regency. In proving this, two research questions are proposed, namely: (1) What is the level of inequality in Non-Cash Food Assistance (BPNT) that occurs in Cenrana District, Bone Regency? and (2) What is the impact on the purchasing power of Muslim communities in Cenrana District, Bone Regency. To answer the two research questions, statistical data obtained from each of the seven villages in Cenrana is needed, and also supported by documentation to strengthen the research results. The statistical data were analyzed using a quantitative approach through the Microsoft Excel application, and the results were interpreted using the theory of income distribution and sharia maqasid. The results show: (1) The BPNT gap that occurred in Cenrana District, Bone Regency from 2018-2020 is a moderate (normal) gap, where in 2018 the gap was at the point of 0.45789 then in 2019 the Gini ratio point showed 0.46709 and in 2020 it is at the point of 0.46293 and the Lorenz curve tends to experience an ideal distribution line. (2) The impact on the purchasing power of the Muslim community in Cenrana District, Bone Regency, is a decrease in purchasing power. Due to inequality in the distribution of non-cash food assistance (BPNT).

David Ricardo – recognized leader in classical political economy (to the 250th anniversary of his birth)

Introduction. David Ricardo is a very prominent figure in the history of economic thought. He is a recognized leader in classical political economy and a reputable financier in both Britain and Europe in the first half of the XIX century. He is rightly considered one of the creators of the labor theory of value, he has brought it to its logical conclusion. The scientist made a significant contribution to the development of a scientific method for studying economic phenomena.Purpose of the research is to generalize the economic views of a prominent scientist on economic phenomena and processes, the action of economic laws that ensure the balance of a market economy and the basic principles of economic liberalism; analyze the Ricardo’s views on the laws of social wealth distribution between three classes of society and the impact of the existing distribution of income on the growth of wealth.Methods. The methodological basis of the study are such general scientific methods as analysis, synthesis, induction and deduction, which were used to assess the views, conclusions and recommendations of the scientist to ensure market equilibrium and increase the material wealth of society; historical – to understand the essence of the evolution of existing views on the labor theory of value, the theory of money and land rent; combining the abstract method with quantitative analysis to determine the quantitative characteristics of economic phenomena; positive and normative – to study the main and distinctive features in the views of representatives of classical political economy.Results. It has been researched the David Ricardo’s scientific work and it has been established that he was a prominent representative of classical political economy, a follower and at the same time an opponent of certain theoretical positions of Adam Smith. It was found that the most important ideas of economic theory have been reflected in his labor theory of value, the theory of capital and money, the theory of income distribution, tax theory and the theory of comparative advantage in international trade. It was established that the scientist had made a significant contribution to the development of the scientific method of research, in particular, by introducing the method of convergence from the abstract to the concrete and widespread use of the method of scientific deduction. According to the scientist, the subject of political economy should be the study of the laws of distribution of income between classes of society in the form of rents, profits and wages. D. Ricardo made a significant contribution to the justification of free trade policy in the international sphere, the importance and profitability of foreign trade for countries.Discussion. The prospect for further research is a deeper and more detailed analysis of the methods used by the scientist in the study of economic phenomena and processes. This will allow assessing the Ricardo’s contribution to the formation and development of economics more objective.

Correcting inequality of personal incomes before income taxes and transfers: theoretical underpinnings and competition policy options

Aim: The purpose of this paper is to bring together theory and policy of (personal) income distribution on the one hand and competition policy on the other hand.
 Design / research: The methods used in this paper cover a brief model set-up, followed by a numerical model-calibration. Thereafter, we present a model simulation and proceed to a Gini decomposition. Herewith, we are able to demonstrate how market imperfections translate into a higher concentration of personal incomes.
 Conclusions / findings: Our major finding is that only a rigorous competition policy is qualified to not only correct for market imperfections, but also to fight a greater inequality of personal incomes ex-ante.
 Originality / value of the article: This contribution provides – to our knowledge for the first time – a simultaneous explanation for stagnating, if not falling real wages and a deteriorating development of inequality of personal incomes, as measured by the Gini coefficient ex-ante. The US economy is a case study for this double observation, but many more developed economies may follow in the foreseeable future.
 Limitations of the research: The implication of the research is that long before government intervenes income distribution via taxes and transfers, competition policy should correct for market imperfections and thereby reduce the inequality of personal incomes. Unfortunately, to this point, we observe a lack of meaningful macroeconomic indicators for market imperfections and hence the possibility to conduct broad econometric studies in this area of investigation.

The Success of the Cobb-Douglas Production Function Is An Illusion

The Cobb-Douglas production function (the C-D function) is believed to have successfully validated and consolidated the marginal productivity theory of income distribution (MPTID) and the aggregate production function (APF). However, this paper discovers that this success is an illusion. It demonstrates neither the partial derivatives of the C-D function are as believed to be the marginal productivities of production factors nor its homogeneity is as believed to be a technical result of the constant returns to scale (CRS). Without these believed theoretical contents, the C-D function is further shown to be just a mathematical transformation of the national income identity. It is in fact not a production function as it does not truly summarize any productive behavior or technological relationships. The illusion should have been one of the reasons why the mainstream macro models, of which the C-D function alike is one of the cornerstones, have been struggling with the identification problems and failed to foresee the GFC. Methodologically, the illusion is a result of grafting dynamic data upon the static concept of marginal productivity and confusing the concept of CRS with the fact that the sum of all factor’s income shares must equal 1.

A baseline supermultiplier model for the analysis of fiscal policy and government debt

The article presents a basic Sraffian supermultiplier model for the analysis of fiscal policy and government debt. First, we discuss the assumptions and the equilibrium and stability properties of the model. Next, we investigate the effects on the main endogenous variables of the model (including the primary government deficit and debt ratios) of changes in the rate of growth and composition of autonomous demand, in the tax rates on profits and wages, and in the rate of interest. The analysis of the impacts of changes in the interest rate is conducted according to two possible closures for the Classical/Sraffian theory of income distribution. In the first closure the changes in the rate of interest do not affect income distribution between wages and profits, which implies that its influence over the endogenous variables operates only through the financial component of total government deficit. The second closure is the monetary theory of distribution, according to which there is an inverse relationship between the rate of interest and the wage share. In this case, besides the pure financial effect, we show that the change in the rate of interest affects the economy through the equilibrium value of the supermultiplier and the tax burden.

The debate about Sraffian Supermultiplier Model and the future of heterodox growth models

ABSTRACT This paper aims to present the recent debate about Sraffian Supermultiplier Model (SSM), that gained notoriety in the academic environment after the controversy between Peter Skott (2016) and Marc Lavoie (2016, 2017) on the specification of the investment function of the Neo-Kaleckian models of income growth and distribution. Lavoie used the SSM model as an attempt to rescue the Neo-Kaleckians models of the devastating criticism made by Peter Skott (2010) regarding the specification of the investment function. In this context, we will not only argue that this rescue operation was not successful, but we will also question the capacity of SSM models to serve as an “alternative closure” for heterodox models of income growth and distribution, due to three fundamental shortcomings of the SSM approach, which are: (i) the hypothesis that the normal degree of utilization of the productive capacity is an exogenous variable, (ii) that investment in capacity expansion is totally endogenous; and (iii) the applicability of this approach out of a closed economy framework. We will also argue that the Kaldorian models of growth, which are one of the theoretical foundations of the so-called Developmentalist Macroeconomics, and stock-flow consistent models (SFC) seem to be much more promising alternatives for the development of heterodox theories of growth and income distribution.

PIERO SRAFFA ON INCOME DISTRIBUTION

Gelir dağılımı mefhumu sosyal, kültürel, ekonomik ve politik yönleriyle İktisat biliminin en kompleks konularından biridir. Bu noktada Piero Sraffa İktisat bilimine katkı sağlayan en önemli bilim adamlarından olmakla birlikte,n başyapıtı olan Malların Mallarla Üretimi, İktisat Kuramını Eleştiriye Açış adlı kitabında gelir dağılımına ilişkin açık bir teori ortaya koymamıştır. Her ne kadar kitabında gelir dağılımına ilişkin somut bir teori olmasa da Sraffa’nın Klasiklerin aksine geçimlik ücreti ele almaması ve kar havuzu yaklaşımı dolayısıyla, teorileri Marx’ın emeğin sömürüsü çerçevesinde incelenmektedir. Fakat Sraffa’nın bu yaklaşımının başta geçimlik ücreti oluşturan zorunlu malların doğası noktasındaki problemler olmak üzere diğer bir takım teknik problemler sebebiyle de oluştuğu söylenebilir. Çalışmamızda Sraffa’nın gelir dağılımına yönelik yaklaşımı Politik Ekonomi çerçevesinde ve Sraffa’nın arşiv çalışmaları yardımıyla incelenmiştir.

A Innovative Income Distribution Theory Based on Interdisciplinary Perspective—Changing from “Taxing Me” to “I Want to Donate”

A Innovative Income Distribution Theory Based on Interdisciplinary Perspective—Changing from “Taxing Me” to “I Want to Donate”

USA Income Distribution Counter-Business-Cyclical Trend

In this paper, the L1 norm of continuous functions and corresponding continuous estimation of regression parameters are defined. The continuous L1 norm estimation problems of linear one and two parameters models are solved. We proceed to use the functional form and parameters of the probability distribution function of income to exactly determine the L1 norm approximation of the corresponding Lorenz curve of the statistical population under consideration. U.S. economic data used to estimate income distribution. An interesting finding of these calculations is that the distribution of income obeys counter-wise business cycles fluctuations. This finding is a new area for research in the realm of the theory and application of income distribution and business cycles interrelationship.

Functional Form for Estimating the Lorenz Curve

A flexible Lorenz curve which offers different curvatures allowed by the theory of income distribution is introduced. The intrinsically autoregressive nature of the errors in cumulative data of the Lorenz curve is also under consideration.

Marx‐biased technical change and income distribution: A panel data analysis

AbstractThis paper provides a further empirical evaluation of the Neoclassical theory of distribution as opposed to Marx‐biased technical change (MBTC) using a series of panel estimators. We argue that a panel data analysis is instrumental in increasing the efficiency and validity of the test. Our results generalize previous findings in providing support for MBTC and against the Neoclassical theory of income distribution.

A Innovative Income Distribution Theory Based on Culture Theory and Habit Theory—Changing from "Taxing Me" to "I Want to Donate"

Traditional income distribution theories are always limited in tax related theories. Basing on Culture Theory and Habit Theory, an Innovative Income Distribution Theory was built on changing from passive Taxing me to positive I want to donate. Afterwards several policy suggestions were proposed.

A Innovative Income Distribution Theory Based on Motivation Theory and Conformity Theory—Changing from ‘Taxing Me’ to ‘I Want to Donate’

Traditional income distribution theories are always limited in tax related theories. Basing on Motivation Theory and Conformity Theory, an Innovative Income Distribution Theory was built on changing from passive ‘Taxing me’ to positive ‘I want to donate’. Afterwards several politics suggestions were proposed.

Marx-Biased Technical Change and Income Distribution: A Panel Data Analysis

This paper provides a further empirical evaluation of the Neoclassical theory of distribution as opposed to Marx-biased technical change (MBTC) by applying the theoretical and empirical framework developed by Foley and Michl (1999), Michl (1999, 2009) and Basu (2010) to a panel of countries. Basu (2010) developed a test based on cross-sectional data: we argue that a panel data analysis is instrumental in increasing the efficiency and validity of the test. Our results generalize Basu’s findings in providing support for MBTC and against the Neoclassical theory of income distribution.