economics Economics () is the social science that studies the production, distribution, and consumption of goods and services. Economics focuses on the behaviour and interactions of economic agents and how economies work. Microeconomics analy ...

, distribution is the way total

output Output may refer to: * The information produced by a computer, see Input/output * An output state of a system, see state (computer science) * Output (economics), the amount of goods and services produced ** Gross output in economics, the value ...

, income, or

wealth Wealth is the abundance of valuable financial assets or physical possessions which can be converted into a form that can be used for transactions. This includes the core meaning as held in the originating Old English word , which is from an ...

is distributed among individuals or among the factors of production (such as labour,

land Land, also known as dry land, ground, or earth, is the solid terrestrial surface of the planet Earth that is not submerged by the ocean or other bodies of water. It makes up 29% of Earth's surface and includes the continents and various isl ...

, and capital). In general theory and in for example the U.S. National Income and Product Accounts, each unit of output corresponds to a unit of income. One use of national accounts is for classifying factor incomes and measuring their respective shares, as in national Income. But, where focus is on income of ''persons'' or ''households'', adjustments to the national accounts or other data sources are frequently used. Here, interest is often on the fraction of

income Income is the consumption and saving opportunity gained by an entity within a specified timeframe, which is generally expressed in monetary terms. Income is difficult to define conceptually and the definition may be different across fields. F ...

going to the top (or bottom) ''x'' percent of households, the next ''x'' percent, and so forth (defined by equally spaced cut points, say quintiles), and on the factors that might affect them (globalization, tax policy, technology, etc.).

Descriptive, theoretical, scientific, and welfare uses

Income distribution In economics, income distribution covers how a country's total GDP is distributed amongst its population. Economic theory and economic policy have long seen income and its distribution as a central concern. Unequal distribution of income causes ec ...

can describe a prospectively observable element of an economy. It has been used as an input for testing theories explaining the distribution of income, for example human capital theory and the theory of economic discrimination (Becker, 1993, 1971). In welfare economics, a level of ''feasible'' output possibilities is commonly distinguished from the distribution of income for those output possibilities. But in the formal theory of ''social'' welfare,

rules Rule or ruling may refer to: Education * Royal University of Law and Economics (RULE), a university in Cambodia Human activity * The exercise of political or personal control by someone with authority or power * Business rule, a rule pert ...

for selection from feasible distributions of income and output are a way of representing normative economics at a high level of generality.

Neoclassical distribution theory

neoclassical economics Neoclassical economics is an approach to economics in which the production, consumption and valuation (pricing) of goods and services are observed as driven by the supply and demand model. According to this line of thought, the value of a good ...

, the

supply and demand In microeconomics, supply and demand is an economic model of price determination in a market. It postulates that, holding all else equal, in a competitive market, the unit price for a particular good, or other traded item such as labo ...

of each factor of production interact in factor markets to determine equilibrium output, income, and the income distribution. Factor demand in turn incorporates the marginal-productivity relationship of that factor in the output market. Analysis applies to not only capital and land but the distribution of income in labor markets. The neoclassical growth model provides an account of how the distribution of income between capital and labor is determined in competitive markets at the

macroeconomic Macroeconomics (from the Greek prefix ''makro-'' meaning "large" + ''economics'') is a branch of economics dealing with performance, structure, behavior, and decision-making of an economy An economy is an area of the production, distributio ...

level over time with technological change and changes in the size of the capital stock and labor force. F.H. Hahn (2008). "neoclassical growth theory," '' The New Palgrave: A Dictionary of Economics''
Abstract.
/ref> More recent developments of the distinction between human capital and

physical capital Physical capital represents in economics one of the three primary factors of production. Physical capital is the apparatus used to produce a good and services. Physical capital represents the tangible man-made goods that help and support the pro ...

and between

social capital Social capital is "the networks of relationships among people who live and work in a particular society, enabling that society to function effectively". It involves the effective functioning of social groups through interpersonal relationship ...

and personal capital have deepened analysis of distribution.

Statistics

Vilfredo Pareto proposed the distribution of income can be described by a power-law: this is now called the Pareto distribution.

Notes

References

* A.B. Atkinson and F. Bourguignon, ed. (2000). ''Handbook of Income Distribution'', v. 1. Elsevier. Description & chapter-previe
links.
* _____ (2001). "Income Distribution," '' International Encyclopedia of the Social & Behavioral Sciences'', pp. 7265–71
Abstract.
*
(UCP descr)
*
(UCP descr)
* Harry Brighouse and Adam Swift (2008). "egalitarianism." '' The New Palgrave Dictionary of Economics''. 2nd Edition
Abstract.
* Sheldon Danziger and Peter Gottschalk (1995). ''America Unequal'', Harvard University Press, Cambridge, MA
(book abstract)
* Sheldon Danziger, Robert Haveman, Robert Plotnick (1981). "How Income Transfer Programs Affect Work, Savings, and the Income Distribution: A Critical Review," ''Journal of Economic Literature'' 19(3),
pp. 975–1028
* Milton Friedman and Simon Kuznets (1945). ''Income from Independent Professional Practice'' NBER. * Julian Lamont (2003)
"Distributive Justice"
''Stanford Encyclopedia of Philosophy''. * Gian Singh Sahota (1978). "Theories of Personal Income Distribution: A Survey", ''Journal of Economic Literature'', 16(1),
pp. 1–55
* Xavier Sala-Martin (2006
"The World Distribution of Income: Falling Poverty and… Convergence, Period,"
+ button to enlarge), ''Quarterly Journal of Economics," 121(2), May, pp. 351–97. * Paul A. Samuelson and William D. Nordhaus (2004). ''

Economics Economics () is the social science that studies the production, distribution, and consumption of goods and services. Economics focuses on the behaviour and interactions of economic agents and how economies work. Microeconomics analy ...

'', 18th ed., :ch. 12: How Markets Determine Incomes :ch. 13: The Labor Market :ch. 14: Land and Capital :ch. 14: Appendix Markets and Economic Efficiency . * U.S. Census Bureau ( 9992004)
"Income Inequality (1947–1998)."
Some ''distribution'' entries from '' The New Palgrave: A Dictionary of Economics'' (1987): * "distribution, law of," v. 1, pp. 869–72, by J.B. Clark 926 * "distribution theories, classical," v. 1, pp. 872–76, by Luigi Pasinetti. * "distribution theories, Keynesian," v. 1, pp. 876–78, by Mauro Baranzini. * "distribution theories, Marxian," v. 1, pp. 878–83, by David M. Gordon. * "distribution theories, neoclassical," v. 1, pp. 883–86, by Christopher Bliss. * "distributive justice," v. 1, pp. 886–88, by Edmund S. Phelps. * "imputation," v. 2, pp. 838–39, by

Murray N. Rothbard Murray Newton Rothbard (; March 2, 1926 – January 7, 1995) was an American economist of the Austrian School, economic historian, political theorist, and activist. Rothbard was a central figure in the 20th-century American libertarian m ...

. * "inequality between persons," v. 2, pp. 821-24, by Anthony F. Shorrocks. * "interest and profit," v. 2, pp. 877–79, by Carlo Panico. * "marginal productivity theory," v. 3, pp. 323–25, by Robert F. Dorfman. * "Marxian value analysis," v. 3, pp. 383–87 by J.E. Roemer. * "profit and profit theory," v. 3, pp. 1014–21, by Meghnad Desai. * "wages, real and money," v. 4, pp. 840–42, by Henry Phelps Brown. Some ''distribution'' entries from '' The New Palgrave Dictionary of Economics'' (2008), 2nd Ed.: * "classical distribution theories" by Massimo Pivetti
Abstract.
* "convergence" by Steven N. Durlauf and Paul A. Johnson
Abstract.
* "equality of opportunity" by J.E. Roemer
Abstract.
* "income taxation and optimal policies" by Louis Kaplow
Abstract.
* "national income" by Thomas K. Rymes
Abstract.
* "skill-biased technical change" by Giovanni L. Violante
Abstract.
* "wage inequality, changes in" by Stephen Machin and John Van Reenen.
Abstract.
* "women's work and wages" by Francine D. Blau and Lawrence M. Kahn
Abstract.

External links

U.S. National income by type of income, 1959–2005
from 2006 Economic Report of the President via Federal Reserve Bank of St. Louis. {{Authority control Distribution of wealth

Descriptive, theoretical, scientific, and welfare uses

Neoclassical distribution theory

Statistics

See also

Distribution of what?

Distribution theories

Classical distribution theory

Marxian distribution theory

Neoclassical distribution theory

Normative economics of distribution

Notes

References

External links