In
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 anal ...
, distribution is the way total
output, 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 I ...
is distributed among individuals or among the
factors of production (such as
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 fo ...
). 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 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 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 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
In
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, an ...
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 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.
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. Both of these are ways ...
(simplest measure of relative and absolute in income distribution)
** Income quintiles (from the top 20% on down for the U.S.)
** Household income in the United States
** Personal income in the United States
* Economic inequality
There are wide varieties of economic inequality, most notably income inequality measured using the distribution of income (the amount of money people are paid) and wealth inequality measured using the distribution of wealth (the amount of ...
(worldwide overview; causes, effects, normative perspectives)
** Income inequality metrics
** Gini coefficient
** 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 inequality of the wealth distribution.
The curve is a graph showing the prop ...
* Generational accounting
* Involuntary unemployment
Distribution of what?
* Goods (economics)
* Income distribution
* Income
* Distribution of wealth
The distribution of wealth is a comparison of the wealth of various members or groups in a society. It shows one aspect of economic inequality or economic heterogeneity.
The distribution of wealth differs from the income distribution in th ...
* Wealth concentration
* 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 I ...
Distribution theories
Classical distribution theory
* Classical economics: value theory
Marxian distribution theory
* Marxian economics: Marx's economic theories
* Value product
Neoclassical distribution theory
* Neoclassical microeconomic model of labor market demand and supply
* Production function
* Outline of industrial organization
The following outline is provided as an overview of and topical guide to industrial organization:
Industrial organization – describes the behavior of firms in the marketplace with regard to production, pricing, employment and other decisi ...
* Production theory basics
Normative economics of distribution
* Welfare economics
* Distributive justice
* Justice (economics)
* Social choice theory
Social choice theory or social choice is a theoretical framework for analysis of combining individual opinions, preferences, interests, or welfares to reach a ''collective decision'' or ''social welfare'' in some sense.Amartya Sen (2008). "Soci ...
* Social welfare function
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 Dictio ...
''. 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 (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
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 Memori ...
(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 anal ...
'', 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.
* "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
''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 Dictio ...
'' (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
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