Income distribution and income sources in Uruguay

This paper is concerned with changes in the distribution of income sources in Uruguay after the late eighties. An apparent stability in the distribution of total incomes is hiding deep transformations affecting the generation of that income. The distribution across all income earners at the end of the eighties exhibited two well-distinguished poles, each associated with one of the main income sources: pension benefits and wages. This bimodality diminished during the nineties due to the reduction in polarization by income sources. In the same period we find that in the case of labor earnings there was a net transfer of population mass from the middle of the distribution to both extremes, which results in an increasing polarization within this income source. This phenomenon resembles the Anglo-Saxon experience of the shrinking middle class.income sources, inequality, labor market, pension benefits, polarization

Regional Income Distribution in Portugal

The structural evolution of the European economy has shown a real convergence between countries and divergence between regions (Mateus et al., 2000), so the economic and social cohesion, namely the approach of the various territories in terms of standard of living is assumed like a primary objective of economic policy. Concerns about inequality in income distribution have gained importance, encouraging the various studies that address specially inequality among individuals [see the studies of Rodrigues (1994, 1999 and 2008)]. Our research aims to address the problem of inequality in income distribution from a different perspective and we want to answer questions like if geography influences the pattern of inequality, or if the Portuguese’s standard of living depends on the place of residence, and finally, if the spatial units that make up the Portuguese territory have been converging in terms of income in the process of growth. The aim of this paper (which emerges from my PhD Thesis) is to study the regional income differences among the regions and municipalities of Portugal. Our individuals are the territorial units. We intend to evaluate convergence or divergence in income growth using a static analysis, with conventional measures and other indicators, being aware the regional differences in economic performance. To meet the objectives set out, after the introduction, we present some considerations concerning the recent developments in the Portuguese economy, from a regional perspective, which represent the framework of socio-economic conditions that can justify the results in terms of inequality and convergence between the territorial units. Then, after a brief literature review and an analysis of income distribution among municipalities and among the NUTS III of Portugal, we present some inequality measures applied to municipalities’ monthly average wage for the period 1991-2002. Finally, we conclude with a synthesis of results and possible future developments in the context of this work. We find a growing inequality between regional incomes over the period 1990-2006. In our view, the distribution of earnings reflects only the actual distribution of economic activity in Portugal, particularly concentrated in the coastal and metropolitan areas of Lisboa and Porto. The economic specialization and level of education among the population of each territorial unit are also, of course, crucial for this asymmetry on earnings

The Gompertz-Pareto Income Distribution

This work analyzes the Gompertz-Pareto distribution (GPD) of personal income, formed by the combination of the Gompertz curve, representing the overwhelming majority of the economically less favorable part of the population of a country, and the Pareto power law, which describes its tiny richest part. Equations for the Lorenz curve, Gini coefficient and the percentage share of the Gompertzian part relative to the total income are all written in this distribution. We show that only three parameters, determined by linear data fitting, are required for its complete characterization. Consistency checks are carried out using income data of Brazil from 1981 to 2007 and they lead to the conclusion that the GPD is consistent and provides a coherent and simple analytical tool to describe personal income distribution data.Comment: 13 pages, 5 figures, LaTeX. Accepted for publication in "Physica A

Income Distribution and Development

Income distribution is extremely important for development, since it influences the cohesion of society, determines the extent of poverty for any given average per capita income and the poverty-reducing effects of growth, and even affects people's health. The paper reviews the connections between income distribution and economic growth. It finds that the Kuznets hypothesis that income distribution worsens as levels of income increase is not at all strongly supported by the evidence, while growth rates of income are not systematically related to changes in income distribution. However, evidence is accumulating that more equal income distribution raises economic growth. Both political and economic explanations have been advanced. The finding suggests that more equal income distribution is desirable both for equity and for promoting growth.

Dynamics of Income Distribution

In this paper, we have obtained closed-form solutions in Cass-Koopmans growth models with heterogeneous agents. The relationship between the form of production function and the dynamics of income distribution is made explicit. We then use this relationship to determine what production structure is simultaneously consistent with facts on growth and income inequality. Our empirical findings give support to models with decreasing returns in the reproducible factor.Income Distribution, Economic Growth

Unemployment spells and income distribution dynamics

In the U.S., during the 1948-86 period, an approximation to the Gini Index based on the quintiles and on the top 5% of the income distribution yielded a value of 0.351. Further, during this same period, the income share earned by the first quintile was procyclical and 7% more volatile than aggregate yearly output. In this paper we quantify the role played by unemployment spells in determining these and other related issues. To this purpose, we use an extension of the general equilibrium stochastic growth model that includes an endogenous distribution of households indexed by wealth and employment status. Our main findings are the following: i) in a model economy where all households have the same endowments of skills and are subject to the same employment processes, uninsured unemployment spells alone account for a very small share of the concentration of income observed in the U.S., and of the income distribution dynamics -the approximated Gini Index in this model economy is 18% of the one observed in the U.S., and the income share earned by the first quintile is 58% more volatile, ii) this result is robust to including a technology that allows for cyclically moving factor shares, and iii) in a model economy where households are partitioned into different skills groups that are subject to different employment processes in accordance to U.S. data, unemployment spells account for a significantly greater share of the U.S. statistics -the approximated Gini Index in this model economy is 70% of the one observed in the U.S., and the income share earned by the first quintile is 10% more volatile