economics Economics () is the 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 intera ...

, 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 of ...

, income, or

wealth Wealth is the abundance of Value (economics), valuable financial assets or property, physical possessions which can be converted into a form that can be used for financial transaction, transactions. This includes the core meaning as held in the ...

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

labour Labour or labor may refer to: * Childbirth, the delivery of a baby * Labour (human activity), or work ** Manual labour, physical work ** Wage labour, a socioeconomic relationship between a worker and an employer ** Organized labour and the labour ...

, land, and

capital Capital may refer to: Common uses * Capital city, a municipality of primary status ** List of national capital cities * Capital letter, an upper-case letter Economics and social sciences * Capital (economics), the durable produced goods used f ...

). 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 A variety of measures of national income and output are used in economics to estimate total economic activity in a country or region, including gross domestic product (GDP), gross national product (GNP), net national income (NNI), and adjusted nati ...

. 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. IQVIA is a provider of biopharmaceutical development and commercial outs ...

), and on the factors that might affect them (globalization, tax policy, technology, etc.).

Descriptive, theoretical, scientific, and welfare uses

Income distribution 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 social scientists to designate personal attributes considered useful in the production process. It encompasses employee knowledge, skills, know-how, good health, and education. Human capital has a substantial ...

theory and the theory of economic discrimination (Becker, 1993, 1971). In welfare economics, a level of ''feasible'' output

possibilities ''Possibilities'' is the forty-fifth studio album by American jazz pianist Herbie Hancock, released on August 30, 2005, by Hear Music and Vector Recordings. Background The album features a variety of guest musicians such as Trey Anastasio, Joh ...

is commonly distinguished from the distribution of income for those output possibilities. But in the formal theory of ''social'' welfare, rules 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 (economics), market. It postulates that, Ceteris paribus, holding all else equal, in a perfect competition, competitive market, the unit price for a ...

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 as a whole. For example, using interest rates, taxes, and ...

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

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 produc ...

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 relationships ...

and personal capital have deepened analysis of distribution.

Statistics

Vilfredo Pareto proposed the distribution of income can be described by a

power-law In statistics, a power law is a functional relationship between two quantities, where a relative change in one quantity results in a proportional relative change in the other quantity, independent of the initial size of those quantities: one qua ...

: this is now called the

Pareto distribution The Pareto distribution, named after the Italian civil engineer, economist, and sociologist Vilfredo Pareto ( ), is a power-law probability distribution that is used in description of social, quality control, scientific, geophysical, actua ...

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 ''The New Palgrave Dictionary of Economics'' (2018), 3rd ed., is a 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 Diction ...

''. 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 and statistician who received the 1976 Nobel Memorial Prize in Economic Sciences for his research on consumption analysis, monetary history and theory and the ...

and

Simon Kuznets Simon Smith Kuznets (; rus, Семён Абра́мович Кузне́ц, p=sʲɪˈmʲɵn ɐˈbraməvʲɪtɕ kʊzʲˈnʲɛts; April 30, 1901 – July 8, 1985) was an American economist and statistician who received the 1971 Nobel Memorial Pr ...

(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 Paul Anthony Samuelson (May 15, 1915 – December 13, 2009) was an American economist who was the first American to win the Nobel Memorial Prize in Economic Sciences. When awarding the prize in 1970, the Swedish Royal Academies stated that he "h ...

and

William D. Nordhaus William Dawbney Nordhaus (born May 31, 1941) is an American economist, a Sterling Professor of Economics at Yale University, best known for his work in economic modeling and climate change, and one of the 2 recipients of the 2018 Nobel Memoria ...

(2004). ''

Economics Economics () is the 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 intera ...

'', 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 (

999 999 or triple nine most often refers to: * 999 (emergency telephone number), a telephone number for the emergency services in several countries * 999 (number), an integer * AD 999, a year * 999 BC, a year Books * ''999'' (anthology) or ''999: ...

2004)
"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 Mauro Leo Baranzini (born 31 August 1944 in Bellinzona, Switzerland) is a Switzerland, Swiss economist of the Cambridge Post-Keynesian economics, Post-Keynesian school of thought. He was a student of Bruno Caizzi at the ''Scuola Superiore di Com ...

. * "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 and the recipient of the 2006 Nobel Memorial Prize in Economic Sciences. Early in his career, he became known for his research at Yale's Cowles Foundation in the first half of ...

. * "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 ''

'' (2008), 2nd Ed.: * "classical distribution theories" by Massimo Pivetti
Abstract.
* "convergence" by

Steven N. Durlauf Steven Neil Durlauf (born August 12, 1958) is an American social scientist and economist. He is currently Steans Professor in Educational Policy at the Harris School of Public Policy Studies at the University of Chicago The University of Chi ...

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 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 fellow of the Britis ...

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 agency within the Executive Office of the President established in 1946, which advises the President of the United States on economic policy. The CEA provides much of the empirical resea ...

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