A Function for Size Distribution of Incomes

  • Singh S
  • Maddala G
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Abstract

JSTOR is a not-for-profit service that helps scholars, researchers, and students discover, use, and build upon a wide range of content in a trusted digital archive. We use information technology and tools to increase productivity and facilitate new forms of scholarship. For more information about JSTOR, please contact support@jstor.org. The paper derives a function that describes the size distribution of incomes. The two functions most often used are the Pareto and the lognormal. The Pareto function fits the data fairly well towards the higher levels but the fit is poor towards thq lower income levels. The lognormal fits the lower income levels better but its fit towards the upper end is far from satisfactory. There have been other distributions suggested by Champernowne, Rutherford, and others, but even these do not result in any considerable improvement. The present paper derives a distribution that is a generalization of the ParQto distribution and the Weibull distribution used in analyses of equipment failures. The distribution fits actual data remarkably well compared with the Pareto and the lognormal.

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Singh, S. K., & Maddala, G. S. (2008). A Function for Size Distribution of Incomes. In Modeling Income Distributions and Lorenz Curves (pp. 27–35). Springer New York. https://doi.org/10.1007/978-0-387-72796-7_2

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