THE INCOME UNIT AND THE ANATOMY OF INCOME DISTRIBUTION*

This paper focuses on a neglected aspect of the treatment of the income unit in the construction of size distributions of income. If the size distribution is to be an indicator of the distribution of economic welfare, and if the economic welfare of each individual in society is to count equally, then conventional distributions are inconsistent with individualistic welfare functions. We estimate size distributions with each person's welfare weighted equally, and contrast these results with those weighting each household unit's welfare equally. The choice of weights is shown to affect both the level and the trend in income inequality.     

THE SOCIAL SIGNIFICANCE OF INCOME DISTRIBUTION STATISTICS

In both political discussions and scientific literature the income distribution has come to occupy a central position for the consideration of social welfare and economic equalization. It has been assumed that an individual's income reflects his consumption opportunities and therefore his standard of living or economic welfare. The thesis of this paper is, however, that there are reasons for being quite pessimistic about drawing meaningful conclusions from income distribution data. As illustrated by the use of Swedish data, the distribution of income gives an extremely incomplete picture of the distribution of consumption for a wide variety of definitional and statistical reasons. The distribution of consumption, furthermore, cannot be transformed into a corresponding distribution of welfare, since there is no well defined concept of welfare. The treatment of public consumption in empirical analysis of the distribution of welfare also raises problems. The paper closes with the presentation of the conceptual basis for an alternative to the traditional method of analyzing the distribution of income.     

VERTICAL DIFFERENTIATION AND THE DISTRIBUTION OF INCOME

The paper analyses the effects of income concentration on the behaviour of a duopoly with vertical product differentiation and uncovered market. By using a trapezoid distribution, we solve explicitly for market equilibrium as a function of a mean preserving spread of the income distribution. We show that overall more concentrated incomes imply stronger product differentiation, as the presence of a large share of middle‐income consumers stimulates a price competition, whose effects are dampened through an enlargement of the quality spread. While the high‐quality advantage and market coverage increase unambiguously in the degree of income concentration, the behaviour of prices is non‐monotone in the distribution parameter.     

THE DISTRIBUTION OF INCOME AND WEALTH IN JAPAN

This paper reviews research on the distribution of income and wealth in Japan, identifies sources of data on income and wealth, and describes limitations of these data. Evidence that Japan's poorest income groups are relatively well-off is convincing, but there is less evidence that the overall distribution of income in Japan is more equal than in other OECD countries. Agricultural policy, social welfare policy, the tax system, trends in earnings differentials, and the role of the Japanese family are among the many factors that have shaped Japan's income distribution. The rapid appreciation of the stock market and land prices during the late 1980s led to greater inequality in the distribution of wealth. Rapid population aging is expected to lead to an increase in total national wealth relative to national income which may have an adverse impact on the distribution of income.     

THE ESTIMATION OF POVERTY DYNAMICS USING DIFFERENT MEASUREMENTS OF HOUSEHOLD INCOME

If surveys offer two different measurements of household income, one can use them simultaneously to identify the potential effects of measurement error on the observed-income mobility of the poor. In this paper we investigate transition tables between subsequent income states. Latent Markov models are used to model incorrect classifications of income states. Misclassifications are interpreted as measurement error or spurious changes that are not consistent with a simple transition table model. The empirical results for the German Socio-Economic Panel (GSOEP) show that the observed transition tables overestimate the mobility between poverty states.     

THE ELECTORAL COSTS OF SPECIAL INTEREST POLITICS WHEN VOTERS ARE IGNORANT*

It is widely believed that the free-rider problem and the incentives to build minimum winning coalitions cause politics to reflect the preferences of special interest groups. Nevertheless, if voters do not know all the positions of all the candidates, then a candidate who proposes policies that benefit the public at large may defeat a candidate who depends on the support of special interests. Moreover, even if the latter candidate can win, he must use a publicity strategy which allows any voter to hear of proposals that benefit groups other than the voter's.     

THE INCOME DISTRIBUTION EFFECTS OF A NATURAL GAS PRICE INCREASE

Deregulation of wellhead natural gas prices will affect individuals as consumers and resource owners. It is shown that higher natural gas prices will be roughly progressive with respect to household and general consumers. The effects on the distribution of resource earnings will be ambiguous because although the oil and gas industry is highly capital intensive, natural gas price deregulation will likely cause reduced spending on other capital-intensive activities, including deep drilling for high cost gas, gas utility distribution, and exports. Overall, no clear case can be made that gas wellhead price deregulation will be regressive     

THE CREATION OF A MICRODATA FILE FOR ESTIMATING THE SIZE DISTRIBUTION OF INCOME*

This paper describes the methods used by the Office of Business Economics, U.S. Department of Commerce, in creating a microdata file for use in estimating the size distribution of income. It explains the techniques of statistical matching involved in merging microdata files from various sources to correct and supplement income estimates in the original field survey (The Current Population Survey) and to incorporate additional information that can be used to estimate items and types of income not contained in the original file.     

THE DYNAMICS OF LABOUR'S INCOME SHARES AND THE WAGE CURVE–PHILLIPS CURVE CONTROVERSY

Based on a re-parameterised Blanchflower–Oswald model this paper uses long macro-data from the OECD countries to discriminate between the Philips curve and the wage curve and examines whether there are any differences in wage dynamics between Europe and the United States. The evidence gives support for the Phillips curve and shows that wage dynamics are no different between the United States and Europe.     

THE DISTRIBUTION OF YUGOSLAVIA'S NATIONAL INCOME BY SOCIAL CLASSES IN 1938

This paper presents the results of an investigation of the distribution of Yugoslavia's national income by social classes in 1938. The population in mid-1938 was apportioned among social classes as follows: proletariat 34.6 per cent, middle classes 59.2 per cent, bourgeoisie 5.3 per cent, 0.9 per cent unallocated. About three-quarters of the population was rural. The proletariat amounted to 5.2 million persons, of which 3 million were peasants living on dwarf holdings and 2.2 million were rural and urban wage earners. Unemployment in the non-agricultural sector was 10 per cent; if the agricultural sector is added, overall un- and under-employment amounted to 31 per cent. The bourgeoisie consisted of 0.8 million persons, of which two-fifths were rich peasants. Of the 9 million persons in the middle classes, 7 million were peasants with small and medium holdings. The remainder were mainly minor entrepreneurs in the non-agricultural sector. The proletariat accounted for 35 per cent of total population but only 18 per cent of aggregate income, whereas the bourgeoisie with 5 per cent of the population received 26 per cent of aggregate income. The distribution of income among the various groups of the non-agricultural population was more unequal than among the groups of the agricultural population. Estimates are preesented of the distribution of income by various types and sources, for agricultural and non-agricultural population, together with income per capita, average earnings per employed worker, labor productivity, and capital intensity, the last by industrial branches as well as social classes.     

NONCASH INCOME, EQUIVALENCE SCALES, AND THE MEASUREMENT OF ECONOMIC WELL-BEING

Little attention has been paid to the importance of consistency between the specifications of the income and the equivalence scales used in measuring economic well-being when noncash income is included in the definition of income. This article finds that inconsistency between the income and needs sides of a comparison can be important when some types of noncash income are included. An upward bias in the measured economic status of the aged when Medicare is included in income and an ordinary equivalence scale is used is presented as an example of the important effects of this consistency problem.     

ENTRY AND QUALITY SIGNALLING WHEN ONLY SOME CONSUMERS ARE INFORMED OF THE ENTRANT'S QUALITY

This paper focuses on competition between an incumbent and an entrant when only the entrant's quality is unknown to (some) consumers. The incumbent may or may not know the entrant's quality. The model reveals a separating equilibrium where the entrant's high price signals its high quality when the proportion of informed consumers is at some intermediate value. The case in which the incumbent knows the entrant's quality generates two additional equilibria. When the proportion of informed consumers is large enough, firms choose their prices as in the complete information case. The entrant's high price in combination with the incumbent's low price signals the entrant's high quality. When the proportion of informed consumers is at some intermediate value, the incumbent's high price signals the entrant's low quality, while its low price signals the entrant's high quality. Interestingly, we find that entry may be facilitated with informational product differentiation.     

THE INTERGENERATIONAL CORRELATION BETWEEN CHILDREN'S ADULT EARNINGS AND THEIR PARENTS' INCOME: RESULTS FROM THE MICHIGAN PANEL SURVEY OF INCOME DYNAMICS

Intergenerational correlations between parental income and child earnings reflect the extent of intergenerational economic mobility and equality of opportunity. Previous estimates are about 0.2, but these estimates suffer from a number of problems, including the use of but one year of observations and of nonrandom samples. We present new estimates based on the Panel Study of Income Dynamics. These estimates suggest correlations over 0.5 with longer-run income and earning measures, as well as some gender and race differences and some impact of liquidity constraints. They also suggest that the intergenerational elasticity is greater as parental income increases, the opposite of the Becker-Tomes conjecture.     

THE STRUCTURE OF THE EARNINGS DISTRIBUTION: HOW ARE HOUSEHOLDS AND INDIVIDUALS RELATED?*

This paper investigates the links between individual and household distributions of earnings. Using a sample of 1991 data from the UK, considerable complexity is uncovered in the structure of the household earnings distribution. This is due to heterogeneity of earners and positive ‘clustering’ of earners within households. The structure of the clustering behaviour of earners for different household types is estimated, and the contribution of clustering to overall earnings inequality is evaluated. Perhaps surprisingly in view of the observed clustering behaviour, it is found that clustering has reduced overall inequality, although the mean-adjusted distribution of individual earnings is insignificantly different from the distribution of household earnings.     

THE DISTRIBUTION OF HOUSEHOLD INCOME AND EXPENDITURE IN PORTUGAL: 1980 AND 1990

From 1980 to 1990 Portugal experienced a generalized liberalization of economic activity, due in large part to its 1986 integration in the European Union. This paper studies the changes in the Portuguese distribution of household income and expenditure during this period, using micro-data on household budgets and applying recent developments in statistical inference for Lorenz curves. We find a significant increase in six measures of welfare and an unambiguous decrease in the inequality of the respective distributions. Different explanations for the findings of decreased inequality are discussed.