UNIVERSAL STRUCTURE OF THE PERSONAL INCOME DISTRIBUTION

By W. Souma. 2000

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We investigate the Japanese personal income distribution in the high income range over the 112 years 1887-1998, and that in the middle income range over the 44 years 1955-98. It is observed that the distribution pattern of the lognormal with power law tail is the universal structure. However the indexes specifying the distribution differ from year to year. One of the index characterizing the distribution is the mean value of the lognormal distribution; the mean income in the middle income range. It is found that this value correlates linearly with the Gross Domestic Product (GDP). To clarify the temporal change of the equality or inequality of the distribution, we analyze Pareto and Gibrat indexes, which characterize the distribution in the high income range and that in the middle income range respectively. It is found for some years that there is no correlation between the high income and the middle income. It is also shown that the mean value of Pareto index equals to 2, and the change of this index is effected by the change of the asset price. From these analysis we derive four constraints that must be satisfied by mathematical models.

Subfields: Computational Theory and Mathematics, Economics and Econometrics, Sociology and Political Science

View Paper: https://www.semanticscholar.org/paper/ebe064d418c8e5830c7c4d477a2e76824452b787

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Citations in the corpus

Colloquium: Statistical mechanics of money, wealth, and income (2009, background): “he colonial era. Income distribution has been examined in econophysics papers for diﬀerent countries: Japan (Aoyama et al., 2003; Ferrero, 2004, 2005; Fujiwara et al., 2003; Nirei and Souma, 18 2007; Souma, 2001, 2002; Souma and Nirei, 2005), Germany (Clementi and Gallegati, 2005a; Clementi, Gallega”
Modeling future vehicle sales and stock in China (2012, background): “(Jørgensen and Wentzel-Larsen, 1990), especially in emerging economics such as China (Souma, 2001).”
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”
Power law tails in the Italian personal income distribution (2004, background): “personal income data for the years 1935–36 suggest a power law distribution for the high-income range and a lognormal distribution for the rest; a similar shape is found by [3] investigating the Japanese income and income tax data for the high-income range over the 112 years 1887–1998, and for the m”
Growth and fluctuations of personal income (2002, background): “T his fact, com bined w ith an approxim ate tim ereversalsym m etry,leads to the Pareto law ,thereby explaining it as a consequence ofa stable econom y.”