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In
economics Economics () is a social science Social science is the branch A branch ( or , ) or tree branch (sometimes referred to in botany Botany, also called , plant biology or phytology, is the science of plant life and a bran ...

economics
, distribution is the way total
output Output may refer to: * The information produced by a computer, see * An output state of a system, see * , the amount of goods and services produced ** in economics, the value of net output or GDP plus intermediate consumption ** in economics, ...
, income, or
wealth Wealth is the abundance of valuable financial asset A financial asset is a non-physical asset whose value is derived from a contractual claim, such as deposit (finance), bank deposits, bond (finance), bonds, and participations in companies' sh ...
is distributed among individuals or among the
factors of production In economics Economics () is the social science that studies how people interact with value; in particular, the Production (economics), production, distribution (economics), distribution, and Consumption (economics), consumption of goods a ...
(such as
labour Labour or labor may refer to: * Childbirth Childbirth, also known as labour or delivery, is the ending of pregnancy where one or more babies leaves the uterus by passing through the vagina or by Caesarean section. In 2015, there were about 13 ...
,
land Land is the solid surface of Earth that is not permanently submerged in water. Most but not all land is situated at elevations above sea level (variable over geologic time frames) and consists mainly of Earth's crust, crustal components such a ...
, and
capital Capital most commonly refers to: * Capital letter Letter case (or just case) is the distinction between the letters that are in larger uppercase or capitals (or more formally ''majuscule'') and smaller lowercase (or more formally ''minusc ...
). In general theory and in for example the U.S.
National Income and Product Accounts The national income and product accounts (NIPA) are part of the national accounts of the United States. They are produced by the Bureau of Economic Analysis of the Department of Commerce. They are one of the main sources of data on general econo ...
, 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 A variety of measures of national income and output are used in economics Economics () is the social science that studies how people interact with value; in particular, the Production (economics), production, distribution (economics), distr ...
. 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 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 IQVIA, formerly Quintiles and IMS Health, Inc., is an American multinational company serving the combined industries of health information technology and clinical research. It is a provider of biopharmaceutical development and commercial outsou ...
), and on the factors that might affect them (globalization, tax policy, technology, etc.).


Descriptive, theoretical, scientific, and welfare uses

Income distributionIn economics Economics () is the social science that studies how people interact with value; in particular, the Production (economics), production, distribution (economics), distribution, and Consumption (economics), consumption of goods and ...
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 Human capital is a concept used by human resource professionals to designate personal attributes considered useful in the production process. It encompasses employee knowledge Knowledge is a familiarity or awareness, of someone or someth ...

human capital
theory and the theory of economic discrimination (Becker, 1993, 1971). In
welfare economics Welfare economics is a branch of economics that uses microeconomics, microeconomic techniques to evaluate well-being (welfare) at the aggregate (economy-wide) level. Attempting to apply the principles of welfare economics gives rise to the fiel ...
, 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: Human activity * The exercise of political Politics (from , ) is the set of activities that are associated with Decision-making, making decisions in Social group, groups, or other forms of Power (social and po ...
for selection from feasible distributions of income and output are a way of representing
normative economicsNormative economics (as opposed to positive economics) is a part of economics whose objective is Equity (economics), fairness or what the outcome of the economy or goals of public policy ''ought to be''.Paul A. Samuelson and William Nordhaus, William ...
at a high level of generality.


Neoclassical distribution theory

In
neoclassical economics Neoclassical economics is an approach to economics in which the production, consumption and valuation (pricing) of goods and services are driven by the supply and demand In microeconomics, supply and demand is an economic model In econo ...
, the
supply and demand In microeconomics Microeconomics is a branch of that studies the behavior of individuals and in making decisions regarding the allocation of and the interactions among these individuals and firms. Microeconomics focuses on the study ...

supply and demand
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 Neoclassical or neo-classical may refer to: * Neoclassicism or New Classicism, any of a number of movements in the fine arts, literature, theatre, music, language, and architecture beginning in the 17th century ** Neoclassical architecture, an arc ...
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 Economics () is the social science that studies how people interact with value; in particular, the Production (economics), producti ...
level over time with
technological change Technological change (TC) or technological development, is the overall process of invention An invention is a unique or novel A novel is a relatively long work of narrative fiction, typically written in prose and published as a book. The ...
and changes in the size of the capital stock and labor force. (2008). "neoclassical growth theory," ''
The New Palgrave: A Dictionary of Economics ''The New Palgrave Dictionary of Economics'' (2018), 3rd ed., is an twenty-volume reference work on economics published by Palgrave Macmillan. It contains around 3,000 entries, including many classic essays from the original Inglis Palgrave Dictiona ...
''
Abstract.
/ref> More recent developments of the distinction between
human capital Human capital is a concept used by human resource professionals to designate personal attributes considered useful in the production process. It encompasses employee knowledge Knowledge is a familiarity or awareness, of someone or someth ...

human capital
and
physical capital Physical capital represents in economics Economics () is the social science that studies how people interact with value; in particular, the Production (economics), production, distribution (economics), distribution, and Consumption (economi ...
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 group In the social sciences, a social ...
and personal capital have deepened analysis of distribution.


Statistics

Vilfredo Pareto Vilfredo Federico Damaso Pareto ( , , , ; born Wilfried Fritz Pareto; 15 July 1848 – 19 August 1923) was an Italian civil engineer A civil engineer is a person who practices civil engineering Civil engineering is a Regulation and licensur ...

Vilfredo Pareto
proposed the distribution of income can be described by a
power-law Image:Long tail.svg, 300px, An example power-law graph that demonstrates ranking of popularity. To the right is the long tail, and to the left are the few that dominate (also known as the Pareto principle, 80–20 rule). In statistics, a power law ...
: this is now called the
Pareto distribution The Pareto distribution, named after the Italian civil engineer A civil engineer is a person who practices civil engineering Civil engineering is a Regulation and licensure in engineering, professional engineering discipline that deals with ...
.


See also

*
Median household income The median income is the income amount that divides a population into two equal groups, half having an income above that amount, and half having an income below that amount. It may differ from the mean (or average) income. The income that occurs ...
(simplest measure of relative and absolute in income distribution) **
Income quintiles Household income is an economic standard that can be applied to one household, or aggregated across a large group such as a county, city, or the whole country. It is commonly used by the United States government and private institutions to ...
(from the top 20% on down for the U.S.) **
Household income in the United States Household income Household income is a measure of the combined incomes of all people sharing a particular household A household consists of one or several persons who live in the same dwelling and share meals. It may also consist of ...
**
Personal income in the United States Personal income is an individual's total earnings from wages, investment interest, and other sources. The Bureau of Labor Statistics The Bureau of Labor Statistics (BLS) is a unit of the United States Department of Labor The United States ...
*
Economic inequality There are wide varieties of economic inequality, most notably measured using the distribution of incomeIn economics Economics () is the social science that studies how people interact with value; in particular, the Production (econom ...
(worldwide overview; causes, effects, normative perspectives) **
Income inequality metricsIncome inequality metrics or income distribution metrics are used by social scientists to measure the distribution of income and economic inequality among the participants in a particular economy, such as that of a specific country or of the world ...
**
Gini coefficient In economics Economics () is the social science that studies how people interact with value; in particular, the Production (economics), production, distribution (economics), distribution, and Consumption (economics), consumption o ...

Gini coefficient
**
Lorenz curve upright=1.2, A typical Lorenz curve In economics, the Lorenz curve is a graphical representation of the distribution of income or of wealth. It was developed by Max O. Lorenz in 1905 for representing Economic inequality, inequality of the wealth di ...

Lorenz curve
*
Generational accounting Generational accounting is a method of measuring the fiscal burdens facing current and future generations. Generational accounting considers how much each adult generation, on a per person basis, is likely to pay in future taxes net of transfer pay ...
*
Involuntary unemployment Involuntary unemployment occurs when a person is unemployed Unemployment, according to the OECD The Organisation for Economic Co-operation and Development (OECD; french: Organisation de Coopération et de Développement Économiques, OCDE) ...

Involuntary unemployment


Distribution of what?

*
Goods (economics) In economics Economics () is the social science that studies how people interact with value; in particular, the Production (economics), production, distribution (economics), distribution, and Consumption (economics), consumption of goods ...
*
Income distributionIn economics Economics () is the social science that studies how people interact with value; in particular, the Production (economics), production, distribution (economics), distribution, and Consumption (economics), consumption of goods and ...
*
Income In microeconomics, income is the Consumption (economics), consumption and saving opportunity gained by an entity within a specified timeframe, which is generally expressed in monetary terms.Smith's financial dictionary. Smith, Howard Irving. 190 ...
*
Distribution of wealth The distribution of wealth is a comparison of the wealth Wealth is the abundance (economics), abundance of Value (economics), valuable financial assets or property, physical possessions which can be converted into a form that can be used fo ...
* Wealth concentration *
Wealth Wealth is the abundance of valuable financial asset A financial asset is a non-physical asset whose value is derived from a contractual claim, such as deposit (finance), bank deposits, bond (finance), bonds, and participations in companies' sh ...

Wealth


Distribution theories


Classical distribution theory

* Classical economics: value theory


Marxian distribution theory

* Marxian economics: Marx's economic theories *
Value product The ''value product'' (VP) is an economic concept formulated by Karl Marx Karl Heinrich Marx (; 5 May 1818 – 14 March 1883) was a German philosopher, economist, historian, sociologist, political theorist, journalist and socialist revolutio ...


Neoclassical distribution theory

* Neoclassical microeconomic model of labor market demand and supply *
Production function In economics Economics () is the social science that studies how people interact with value; in particular, the Production (economics), production, distribution (economics), distribution, and Consumption (economics), consumption of goods a ...
*
Outline of industrial organization The following outline is provided as an overview of and topical guide to industrial organization: Industrial organization In economics Economics () is the social science that studies how people interact with value; in particular, th ...
*
Production theory basicsProduction is a process of combining various material inputs and immaterial inputs (plans, know-how) in order to make something for consumption (output). It is the act of creating an output, a good or service which has value and contributes to the ...


Normative economics of distribution

*
Welfare economics Welfare economics is a branch of economics that uses microeconomics, microeconomic techniques to evaluate well-being (welfare) at the aggregate (economy-wide) level. Attempting to apply the principles of welfare economics gives rise to the fiel ...
*
Distributive justice Distributive justice concerns the . Often contrasted with , which is concerned with the administration of law, distributive justice concentrates on outcomes. This subject has been given considerable attention in and the s. In , distributive jus ...
*
Justice (economics)Justice Justice, one of the four cardinal virtues, by Vitruvio Alberi, 1589–1590. Fresco, corner of the vault, studiolo of the Virgin of Mercy, Madonna of Mercy, Palazzo Altemps, Rome Justice, in its broadest sense, is the principle that peopl ...
*
Social choice theory Social choice theory or social choice is a theoretical A theory is a rational Rationality is the quality or state of being rational – that is, being based on or agreeable to reason Reason is the capacity of consciously making sense of ...
*
Social welfare functionIn welfare economics, a social welfare function is a function (mathematics), function that ranks social states (alternative complete descriptions of the society) as less desirable, more desirable, or indifference curve, indifferent for every possible ...


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 The ''International Encyclopedia of the Social & Behavioral Sciences'', originally edited by Neil J. Smelser and Paul B. Baltes, is a 26-volume work published by Elsevier. It has some 4,000 signed articles (commissioned by around 50 subject editors ...
'', pp. 7265–71
Abstract.
*
(UCP descr)
*
(UCP descr)
* Harry Brighouse and Adam Swift (2008). "egalitarianism." ''
The New Palgrave Dictionary of Economics ''The New Palgrave Dictionary of Economics'' (2018), 3rd ed., is an twenty-volume reference work on economics Economics () is a social science that studies the Production (economics), production, distribution (economics), distribution, ...
''. 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 Milton Friedman (; July 31, 1912 – November 16, 2006) was an American economist An economist is a practitioner in the social sciences, social science discipline of economics. The individual may also study, develop, and apply theories and c ...

Milton Friedman
and
Simon Kuznets Simon Smith Kuznets (; rus, Семён Абра́мович Кузне́ц, p=sʲɪˈmʲɵn ɐˈbraməvʲɪtɕ kʊzʲˈnʲɛts; April 30, 1901 – July 8, 1985) was an American American(s) may refer to: * American, something of, from, or relate ...
(1945). ''Income from Independent Professional Practice''
NBER The National Bureau of Economic Research (NBER) is an American private nonprofit A nonprofit organization (NPO), also known as a non-business entity, not-for-profit organization, or nonprofit institution, is a legal entity organized and op ...
. * 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 a social science that studies the Production (economics), production, distribution (economics), distribution, and Consumption (economics), consumption of goods and services. Economics focuses on the behaviour and interact ...
'', 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 (
999999 or triple nine most often refers to: * 999 (emergency telephone number) 250px, A sign on a beach in the coastguard in the event of an emergency 999 is an official emergency telephone number in a number of countries which allows the caller to ...
2004)
"Income Inequality (1947–1998)."
Some ''distribution'' entries from ''
The New Palgrave: A Dictionary of Economics ''The New Palgrave Dictionary of Economics'' (2018), 3rd ed., is an twenty-volume reference work on economics published by Palgrave Macmillan. It contains around 3,000 entries, including many classic essays from the original Inglis Palgrave Dictiona ...
'' (1987): * "distribution, law of," v. 1, pp. 869–72, by
926 Year 926 ( CMXXVI) was a common year starting on Sunday A common year starting on Sunday is any non-leap year A leap year (also known as an intercalary year or wikt:bissextile, bissextile year) is a calendar year that contains an additional ...
* "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 Edmund Strother Phelps (born July 26, 1933) is an American economist An economist is a professional and practitioner in the social science Social science is the Branches of science, branch of science devoted to the study of society, soc ...
. * "imputation," v. 2, pp. 838–39, by Murray N. Rothbard. * "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 Meghnad Jagdishchandra Desai, Lord Desai (born 10 July 1940), is a British economist and former Labour politician. He stood unsuccessfully for the position of Lord Speaker The Lord Speaker is the speaker (politics), presiding officer, chairm ...

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 ''The New Palgrave Dictionary of Economics'' (2018), 3rd ed., is an twenty-volume reference work on economics Economics () is a social science that studies the Production (economics), production, distribution (economics), distribution, ...
'' (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 Stephen Jonathan Machin (born 23 December 1962) is a United Kingdom, British economist and professor of economics at the London School of Economics (LSE). Moreover, he is currently director of the Centre for Economic Performance (CEP) and is a fello ...
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 The Council of Economic Advisers (CEA) is a United States The United States of America (USA), commonly known as the United States (U.S. or US), or America, is a country Contiguous United States, primarily located in North America. It con ...
via Federal Reserve Bank of St. Louis. {{Authority control Distribution of wealth