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Scaling in Income Inequalities and its Dynamical Origin

Author

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  • Zoltan Neda
  • Istvan Gere
  • Tamas S. Biro
  • Geza Toth
  • Noemi Derzsy

Abstract

We provide an analytically treatable model that describes in a unified manner income distribution for all income categories. The approach is based on a master equation with growth and reset terms. The model assumptions on the growth and reset rates are tested on an exhaustive database with incomes on individual level spanning a nine year period in the Cluj county (Romania). In agreement with our theoretical predictions we find that income distributions computed for several years collapse on a master-curve when a properly normalised income is considered. The Beta Prime distribution is appropriate to fit the collapsed data and it is shown that distributions derived for other countries are following similar trends with different fit parameters. The non-universal feature of the fit parameters suggests that for a more realistic modelling the model parameters have to be linked with specific socio-economic regulations.

Suggested Citation

  • Zoltan Neda & Istvan Gere & Tamas S. Biro & Geza Toth & Noemi Derzsy, 2019. "Scaling in Income Inequalities and its Dynamical Origin," Papers 1911.02449, arXiv.org, revised Mar 2020.
    • Handle: RePEc:arx:papers:1911.02449
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    References listed on IDEAS

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    2. Ilda Inácio & José Velhinho, 2022. "Comments on Mathematical Aspects of the Biró–Néda Model," Mathematics, MDPI, vol. 10(4), pages 1-10, February.
    3. Istvan Gere & Szabolcs Kelemen & Geza Toth & Tamas Biro & Zoltan Neda, 2021. "Wealth distribution in modern societies: collected data and a master equation approach," Papers 2104.04134, arXiv.org.
    4. Gere, István & Kelemen, Szabolcs & Néda, Zoltán & Biró, Tamás S., 2024. "Jackpot statistics, a physicist’s approach," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 637(C).
    5. Tam'as S. Bir'o & Zolt'an N'eda, 2020. "Gintropy: Gini index based generalization of Entropy," Papers 2007.04829, arXiv.org.

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