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On the Measurement of Functional Income Distribution

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Abstract

The present paper proposes a theoretical framework to examine the relationship between the functional and personal distribution of income. To this end, it introduces the concept of inequality in income composition. Inequality in income composition is high when two different sources of income are separately earned by the top and the bottom of the income distribution. On the contrary, it is low when each individual has the same population share of the two sources. This article designs an indicator to measure income composition inequality, named income-factor concentration index. The sign of the indicator determines the condition of transmission for the rising share of income from any source to increase overall income inequality. This framework is then applied to several European countries on basis of EU-SILC data

Suggested Citation

  • Marco Ranaldi, 2016. "On the Measurement of Functional Income Distribution," Documents de travail du Centre d'Economie de la Sorbonne 16051rrr, Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne, revised Oct 2018.
    • Handle: RePEc:mse:cesdoc:16051rrr
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    Cited by:

    1. , Stone Center & Ranaldi, Marco, 2020. "Distributional Aspects of Economic Systems," SocArXiv n7wj4, Center for Open Science.
    2. Roberto Iacono & Marco Ranaldi, 2018. "Sources of Inequality in Italy," Working Papers 479, ECINEQ, Society for the Study of Economic Inequality.

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    More about this item

    Keywords

    Income Inequality; Income Composition Inequality; Income Distribution; Functional Income Distribution;
    All these keywords.

    JEL classification:

    • C43 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Index Numbers and Aggregation
    • E25 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Aggregate Factor Income Distribution

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