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Reconsidering social classes and functional income distribution in the 21st century. A theoretical and empirical assessment

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Abstract

The original assumption behind the measurement of functional income distribution was that this measure would reflect uniquely the income allocated to different social classes. However, this straightforward dichotomy is more complicated today than it was 200 years ago for different reasons, such as the diversification of sources of income, and the role of managers. This paper proposes a new estimation of factors income distribution that is based not only on the source of income but also considers class belonging. We provide an empirical estimate for Italy (1991-2016) using the Survey on Households Income and Wealth (Bank of Italy). The revised labourers share is lower than the standard wage share. Moreover, we show that the size of the labour class is growing considerably due to the expansion of wage earners while at the same time they suffer a remarkable loss of income. Despite some labourers move towards the top of the distribution, most of the growing presence of wage income in the top of the distribution is imputable to managers.

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  • Marta Fana & Davide Villani, 2022. "Reconsidering social classes and functional income distribution in the 21st century. A theoretical and empirical assessment," JRC Working Papers on Social Classes in the Digital Age 2022-05, Joint Research Centre.
    • Handle: RePEc:ipt:dclass:202205
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    File URL: https://publications.jrc.ec.europa.eu/repository/handle/JRC128667
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    Cited by:

    1. Luca Giangregorio & Davide Villani, 2023. "Income inequality, top shares of income and social classes in the 21st century," JRC Working Papers on Social Classes in the Digital Age 2023-05, Joint Research Centre.

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    Keywords

    Social classes; Functional Income Distribution; Inequality.;
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