In economics, distribution is the way total output, income, or wealth is distributed among individuals or among the factors of production (such as labour, land, and capital). In general theory and in for example the U.S. National Income and Product Accounts, each unit of output corresponds to a unit of income. One use of national accounts is for classifying factor incomes and measuring their respective shares, as in national Income. But, where focus is on income of persons or households, adjustments to the national accounts or other data sources are frequently used. Here, interest is often on the fraction of income going to the top (or bottom) x percent of households, the next x percent, and so forth (defined by equally spaced cut points, say quintiles), and on the factors that might affect them (globalization, tax policy, technology, etc.).
History
Distribution has been central in the study of political economy since the 19th century, as shown in scholarship by Adam Smith, David Ricardo, and John Stuart Mill.
Descriptive, theoretical, scientific, and welfare uses
Income distribution can describe a prospectively observable element of an economy. It has been used as an input for testing theories explaining the distribution of income, for example human capital theory and the theory of economic discrimination (Becker, 1993, 1971).
In welfare economics, a level of feasible output possibilities is commonly distinguished from the distribution of income for those output possibilities. But in the formal theory of social welfare, rules for selection from feasible distributions of income and output are a way of representing normative economics at a high level of generality.
Neoclassical distribution theory
In neoclassical economics, the supply and demand of each factor of production interact in factor markets to determine equilibrium output, income, and the income distribution. Factor demand in turn incorporates the relationship of that factor in the output market. Analysis applies to not only capital and land but the distribution of income in labor markets.
The neoclassical growth model provides an account of how the distribution of income between capital and labor is determined in competitive markets at the macroeconomic level over time with technological change and changes in the size of the capital stock and labor force. More recent developments of the distinction between human capital and physical capital and between social capital and personal capital have deepened analysis of distribution.
Statistics
Vilfredo Pareto proposed the distribution of income can be described by a power-law: this is now called the Pareto distribution.
See also
- Median household income (simplest measure of relative and absolute in income distribution)
- Income quintiles (from the top 20% on down for the U.S.)
- Household income in the United States
- Personal income in the United States
- Economic inequality (worldwide overview; causes, effects, normative perspectives)
- Income inequality metrics
- Gini coefficient
- Lorenz curve
- Generational accounting
- Involuntary unemployment
Distribution of what?
- Goods (economics)
- Income distribution
- Income
- Distribution of wealth
- Wealth concentration
- Wealth
Distribution theories
Classical distribution theory
- Classical economics: value theory
Marxian distribution theory
- Marxian economics: Marx's economic theories
- Value product
Neoclassical distribution theory
- Neoclassical microeconomic model of labor market demand and supply
- Production function
- Outline of industrial organization
- Production theory basics
Normative economics of distribution
- Welfare economics
- Distributive justice
- Justice (economics)
- Social choice theory
- Social welfare function
Notes
- Paul A. Samuelson and William D. Nordhaus (2004). Economics, 18th ed., [end] Glossary of Terms, "Distribution."
- "Glossary "Factor income"". Bureau of Economic Analysis, U.S. Department of Commerce. 2 October 2006. Archived from the original on 12 June 2018. Retrieved 2010-11-09.
- Hollander, Jacob H. (1906). "The Present State of the Theory of Distribution". Publications of the American Economic Association. 7 (1): 24–45. ISSN 1049-7498.
- Clark, John Bates; McCrea, Roswell C.; Seager, Henry R.; Rosewater, Victor; Kinley, David (1906). "The Present State of the Theory of Distribution-Discussion". Publications of the American Economic Association. 7 (1): 46–60. ISSN 1049-7498.
- John Bates Clark (1902). The Distribution of Wealth. Analytical Table of Contents).
- Philip H. Wicksteed (1914). “The Scope and Method of Political Economy in the Light of the ‘Marginal’ Theory of Value and Distribution," Economic Journal, 24(94), pp. 1–23.
- George J. Stigler (1941). Production and Distribution Theories: The Formative Years (analytical exposition of successive contributions by ten neoclassical economists from about 1870 to 1910). New York: Macmillan. Chapter-preview links.
- C.E. Ferguson (1969). The Neoclassical Theory of Production and Distribution. Cambridge. Description & review excerpt.
- J.R. Hicks (1932, 2nd ed., 1963). The Theory of Wages. London: Macmillan.
- F.H. Hahn (2008). "neoclassical growth theory," The New Palgrave: A Dictionary of Economics. Abstract.
References
- A.B. Atkinson and F. Bourguignon, ed. (2000). Handbook of Income Distribution, v. 1. Elsevier. Description & chapter-preview links.
- _____ (2001). "Income Distribution," International Encyclopedia of the Social & Behavioral Sciences, pp. 7265–71. Abstract.
- Gary S. Becker (1971). The Economics of Discrimination (2nd ed.). University of Chicago Press. ISBN 978-0-226-04115-5. (UCP descr)
- Gary S. Becker (1993). Human Capital: A Theoretical and Empirical Analysis, with Special Reference to Education (3rd ed.). University of Chicago Press. ISBN 978-0-226-04120-9. (UCP descr)
- Harry Brighouse and Adam Swift (2008). "egalitarianism." The New Palgrave Dictionary of Economics. 2nd Edition. Abstract.
- Sheldon Danziger and Peter Gottschalk (1995). America Unequal, Harvard University Press, Cambridge, MA ISBN 0-674-01810-9 (book abstract)
- Sheldon Danziger, Robert Haveman, Robert Plotnick (1981). "How Income Transfer Programs Affect Work, Savings, and the Income Distribution: A Critical Review," Journal of Economic Literature 19(3), pp. 975–1028.
- Milton Friedman and Simon Kuznets (1945). Income from Independent Professional Practice NBER.
- Julian Lamont (2003). "Distributive Justice", Stanford Encyclopedia of Philosophy.
- Gian Singh Sahota (1978). "Theories of Personal Income Distribution: A Survey", Journal of Economic Literature, 16(1), pp. 1–55.
- Xavier Sala-Martin (2006)."The World Distribution of Income: Falling Poverty and… Convergence, Period,"(+ button to enlarge), Quarterly Journal of Economics," 121(2), May, pp. 351–97.
- Paul A. Samuelson and William D. Nordhaus (2004). Economics, 18th ed.,
- ch. 12: How Markets Determine Incomes
- ch. 13: The Labor Market
- ch. 14: Land and Capital
- ch. 14: Appendix Markets and Economic Efficiency .
- U.S. Census Bureau ([1999] 2004). "Income Inequality (1947–1998)."
Some distribution entries from The New Palgrave: A Dictionary of Economics (1987):
- "distribution, law of," v. 1, pp. 869–72, by J.B. Clark [1926].
- "distribution theories, classical," v. 1, pp. 872–76, by Luigi Pasinetti.
- "distribution theories, Keynesian," v. 1, pp. 876–78, by Mauro Baranzini.
- "distribution theories, Marxian," v. 1, pp. 878–83, by David M. Gordon.
- "distribution theories, neoclassical," v. 1, pp. 883–86, by Christopher Bliss.
- "distributive justice," v. 1, pp. 886–88, by Edmund S. Phelps.
- "imputation," v. 2, pp. 838–39, by Murray N. Rothbard.
- "inequality between persons," v. 2, pp. 821–24, by Anthony F. Shorrocks.
- "interest and profit," v. 2, pp. 877–79, by Carlo Panico.
- "marginal productivity theory," v. 3, pp. 323–25, by Robert F. Dorfman.
- "Marxian value analysis," v. 3, pp. 383–87 by J.E. Roemer.
- "profit and profit theory," v. 3, pp. 1014–21, by Meghnad Desai.
- "wages, real and money," v. 4, pp. 840–42, by Henry Phelps Brown.
Some distribution entries from The New Palgrave Dictionary of Economics (2008), 2nd Ed.:
- "classical distribution theories" by Massimo Pivetti. Abstract.
- "convergence" by Steven N. Durlauf and Paul A. Johnson. Abstract.
- "equality of opportunity" by J.E. Roemer. Abstract.
- "income taxation and optimal policies" by Louis Kaplow. Abstract.
- "national income" by Thomas K. Rymes. Abstract.
- "skill-biased technical change" by Giovanni L. Violante. Abstract.
- "wage inequality, changes in" by Stephen Machin and John Van Reenen. Abstract.
- "women's work and wages" by Francine D. Blau and Lawrence M. Kahn. Abstract.
External links
- U.S. National income by type of income, 1959–2005 from 2006 Economic Report of the President via Federal Reserve Bank of St. Louis.
In economics distribution is the way total output income or wealth is distributed among individuals or among the factors of production such as labour land and capital In general theory and in for example the U S National Income and Product Accounts each unit of output corresponds to a unit of income One use of national accounts is for classifying factor incomes and measuring their respective shares as in national Income But where focus is on income of persons or households adjustments to the national accounts or other data sources are frequently used Here interest is often on the fraction of income going to the top or bottom x percent of households the next x percent and so forth defined by equally spaced cut points say quintiles and on the factors that might affect them globalization tax policy technology etc HistoryDistribution has been central in the study of political economy since the 19th century as shown in scholarship by Adam Smith David Ricardo and John Stuart Mill Descriptive theoretical scientific and welfare usesIncome distribution can describe a prospectively observable element of an economy It has been used as an input for testing theories explaining the distribution of income for example human capital theory and the theory of economic discrimination Becker 1993 1971 In welfare economics a level of feasible output possibilities is commonly distinguished from the distribution of income for those output possibilities But in the formal theory of social welfare rules for selection from feasible distributions of income and output are a way of representing normative economics at a high level of generality Neoclassical distribution theoryIn neoclassical economics the supply and demand of each factor of production interact in factor markets to determine equilibrium output income and the income distribution Factor demand in turn incorporates the relationship of that factor in the output market Analysis applies to not only capital and land but the distribution of income in labor markets The neoclassical growth model provides an account of how the distribution of income between capital and labor is determined in competitive markets at the macroeconomic level over time with technological change and changes in the size of the capital stock and labor force More recent developments of the distinction between human capital and physical capital and between social capital and personal capital have deepened analysis of distribution StatisticsVilfredo Pareto proposed the distribution of income can be described by a power law this is now called the Pareto distribution See alsoMedian household income simplest measure of relative and absolute in income distribution Income quintiles from the top 20 on down for the U S Household income in the United States Personal income in the United States Economic inequality worldwide overview causes effects normative perspectives Income inequality metrics Gini coefficient Lorenz curve Generational accounting Involuntary unemploymentDistribution of what Goods economics Income distribution Income Distribution of wealth Wealth concentration WealthDistribution theories Classical distribution theory Classical economics value theoryMarxian distribution theory Marxian economics Marx s economic theories Value productNeoclassical distribution theory Neoclassical microeconomic model of labor market demand and supply Production function Outline of industrial organization Production theory basicsNormative economics of distribution Welfare economics Distributive justice Justice economics Social choice theory Social welfare functionNotesPaul A Samuelson and William D Nordhaus 2004 Economics 18th ed end Glossary of Terms Distribution Glossary Factor income Bureau of Economic Analysis U S Department of Commerce 2 October 2006 Archived from the original on 12 June 2018 Retrieved 2010 11 09 Hollander Jacob H 1906 The Present State of the Theory of Distribution Publications of the American Economic Association 7 1 24 45 ISSN 1049 7498 Clark John Bates McCrea Roswell C Seager Henry R Rosewater Victor Kinley David 1906 The Present State of the Theory of Distribution Discussion Publications of the American Economic Association 7 1 46 60 ISSN 1049 7498 John Bates Clark 1902 The Distribution of Wealth Analytical Table of Contents Philip H Wicksteed 1914 The Scope and Method of Political Economy in the Light of the Marginal Theory of Value and Distribution Economic Journal 24 94 pp 1 23 George J Stigler 1941 Production and Distribution Theories The Formative Years analytical exposition of successive contributions by ten neoclassical economists from about 1870 to 1910 New York Macmillan Chapter preview links C E Ferguson 1969 The Neoclassical Theory of Production and Distribution Cambridge Description amp review excerpt J R Hicks 1932 2nd ed 1963 The Theory of Wages London Macmillan F H Hahn 2008 neoclassical growth theory The New Palgrave A Dictionary of Economics Abstract ReferencesA B Atkinson and F Bourguignon ed 2000 Handbook of Income Distribution v 1 Elsevier Description amp chapter preview links 2001 Income Distribution International Encyclopedia of the Social amp Behavioral Sciences pp 7265 71 Abstract Gary S Becker 1971 The Economics of Discrimination 2nd ed University of Chicago Press ISBN 978 0 226 04115 5 UCP descr Gary S Becker 1993 Human Capital A Theoretical and Empirical Analysis with Special Reference to Education 3rd ed University of Chicago Press ISBN 978 0 226 04120 9 UCP descr Harry Brighouse and Adam Swift 2008 egalitarianism The New Palgrave Dictionary of Economics 2nd Edition Abstract Sheldon Danziger and Peter Gottschalk 1995 America Unequal Harvard University Press Cambridge MA ISBN 0 674 01810 9 book abstract Sheldon Danziger Robert Haveman Robert Plotnick 1981 How Income Transfer Programs Affect Work Savings and the Income Distribution A Critical Review Journal of Economic Literature 19 3 pp 975 1028 Milton Friedman and Simon Kuznets 1945 Income from Independent Professional Practice NBER Julian Lamont 2003 Distributive Justice Stanford Encyclopedia of Philosophy Gian Singh Sahota 1978 Theories of Personal Income Distribution A Survey Journal of Economic Literature 16 1 pp 1 55 Xavier Sala Martin 2006 The World Distribution of Income Falling Poverty and Convergence Period button to enlarge Quarterly Journal of Economics 121 2 May pp 351 97 Paul A Samuelson and William D Nordhaus 2004 Economics 18th ed ch 12 How Markets Determine Incomes ch 13 The Labor Market ch 14 Land and Capital ch 14 Appendix Markets and Economic Efficiency U S Census Bureau 1999 2004 Income Inequality 1947 1998 Some distribution entries from The New Palgrave A Dictionary of Economics 1987 distribution law of v 1 pp 869 72 by J B Clark 1926 distribution theories classical v 1 pp 872 76 by Luigi Pasinetti distribution theories Keynesian v 1 pp 876 78 by Mauro Baranzini distribution theories Marxian v 1 pp 878 83 by David M Gordon distribution theories neoclassical v 1 pp 883 86 by Christopher Bliss distributive justice v 1 pp 886 88 by Edmund S Phelps imputation v 2 pp 838 39 by Murray N Rothbard inequality between persons v 2 pp 821 24 by Anthony F Shorrocks interest and profit v 2 pp 877 79 by Carlo Panico marginal productivity theory v 3 pp 323 25 by Robert F Dorfman Marxian value analysis v 3 pp 383 87 by J E Roemer profit and profit theory v 3 pp 1014 21 by Meghnad Desai wages real and money v 4 pp 840 42 by Henry Phelps Brown Some distribution entries from The New Palgrave Dictionary of Economics 2008 2nd Ed classical distribution theories by Massimo Pivetti Abstract convergence by Steven N Durlauf and Paul A Johnson Abstract equality of opportunity by J E Roemer Abstract income taxation and optimal policies by Louis Kaplow Abstract national income by Thomas K Rymes Abstract skill biased technical change by Giovanni L Violante Abstract wage inequality changes in by Stephen Machin and John Van Reenen Abstract women s work and wages by Francine D Blau and Lawrence M Kahn Abstract External linksU S National income by type of income 1959 2005 from 2006 Economic Report of the President via Federal Reserve Bank of St Louis
