Bridging Macro and Micro: The Sam as a Tool for Better Understanding the Generation of Personal Income Distribution: The Relevance of Pyatt’s Methodological Proposals

Following the seminal Pyatt’ contributions to modeling, the paper shows how a SAM can be used for assessing the effects on the households personal distribution of income of alternative policies directed to changing the ownership of factorial income. The decomposition of the “core†matrix of a very simplified SAM, that links households incomes to the factors ownership, is the first step for linking functional to personal income distribution and for modeling changes in factorial ownership. The relevance of the multiplier approach will be illustrated with one numerical example referred to the Italian economy. The main finding is that the inequality in the personal income distribution is strictly connected with the functional one. Because of the features of the production structure and of the ways of spending the benefits originating from an initially equal increase in disposable income across population deciles increasingly favor the upper-middle income deciles, particularly the top ones.