The exponential Pareto model with hidden income processes: Evidence from Chile

Juan D. Díaz, Pablo Gutiérrez Cubillos and Pablo Tapia Griñen

Physica A: Statistical Mechanics and its Applications, 2021, vol. 561, issue C

Abstract: Building on the two-class income model (Banerjee and Yakovenko, 2010), this paper proposes a new methodology to estimate the income distribution that accounts for hidden sources of income, such as retained earnings. We promote and illustrate this methodology with a case study of the Chilean economy. Our results reveal that after including the hidden sources of income, economic inequality in Chile has remained relatively constant over the last 15 years.

Keywords: Two-class income model; Hidden income processes; Pareto distribution; Retained earnings (search for similar items in EconPapers)
Date: 2021
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:phsmap:v:561:y:2021:i:c:s0378437120306245

DOI: 10.1016/j.physa.2020.125196

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