Temporal evolution of the "thermal" and "superthermal" income classes in the USA during 1983-2001

By A. C. Silva, Victor M. Yakovenko. 2004

195 citations recorded by the source corpus.

Personal income distribution in the USA has a well-defined two-class structure. The majority of population (97–99%) belongs to the lower class characterized by the exponential Boltzmann-Gibbs ("thermal") distribution, whereas the upper class (1–3% of the population) has a Pareto power law ("superthermal") distribution. By analyzing income data for 1983–2001, we show that the "thermal" part is stationary in time, save for a gradual increase of the effective temperature, whereas the "superthermal" tail swells and shrinks following the stock market. We discuss the concept of equilibrium inequality in a society, based on the principle of maximal entropy, and quantitatively show that it applies to the majority of population.

Subfields: Economics and Econometrics, Statistical and Nonlinear Physics

View Paper: https://www.semanticscholar.org/paper/2ca05bdb8157726687917fd18f58d0e87de60ce7

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Citations in the corpus

Econophysics: Empirical facts and agent-based models (2009, unknown): “The Γ-distribution is characterized by a mode xm > 0, in agreement with real data of wealth and income distributions (Dragulescu and Yakovenko (2001a); Ferrero (2004); Silva and Yakovenko (2005); Sala-i Martin and Mohapatra (2002); Sala-i Martin (2002); Aoyama et al. (2003)).”
Pareto's Law of Income Distribution: Evidence for Germany, the United Kingdom, and the United States (2005, background): “Using data coming from several parts of the world, a number of recent studies debate whether the low-middle income range of the income distribution may be fitted by an exponential [ 1-8 ] or lognormal [9-13] decreasing function.4”
Econophysics review: II. Agent-based models (2011, unknown): “Slanina (2001) proposes an analytical treatment of the model introduced by Maslov (2000) and reviewed above.”
Universal patterns of inequality (2009, methodology): “This is known as the proportionality principle of Gibrat [19], and the process is called the multiplicative diffusion [17].”
Colloquium: Statistical mechanics of money, wealth, and income (2009, methodology): “In the limit of continuous trading, Slanina (2004) found the same stationary distribution (18). This result was reproduced using a mathematically more involved treatment of this model by Cordier, Pareschi, and Toscani (2005); Pareschi and Toscani (2006).”