Two-part models of income distributions in Poland

Piotr Lukasiewicz (), Krzysztof Karpio () and Arkadiusz Orlowski ()
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Piotr Lukasiewicz: Department of Informatics, Warsaw University of Life Sciences (SGGW), Nowoursynowska 159, 02-776 Warsaw, Poland
Krzysztof Karpio: Department of Informatics, Warsaw University of Life Sciences (SGGW), Nowoursynowska 159, 02-776 Warsaw, Poland
Arkadiusz Orlowski: Department of Informatics, Warsaw University of Life Sciences (SGGW), Nowoursynowska 159, 02-776 Warsaw, Poland

No 64/2017, Working Papers from Institute of Economic Research

Abstract: Research background: studies of structures of incomes distributions have been performer for about 15 years. They indicate that there is no one model which describes the distributions in their whole range. This effect is explained by the existence of different mechanisms yielding to low-medium and high incomes. While more than 97% of the distributions can be described by models with two or three parameter, high incomes (about 3% or less) is in agreement with power law. Purpose of the article: the aim of this paper is an analysis of the structure of distributions of households’ incomes in Poland. By using various models we verify the hypothesis about two-part structure of those distributions. Methodology/methods: the studies are based on the households’ budgets microdata for years 2004 – 2012. The two-component models were used to describe the incomes distributions. The major parts of the distributions have been described by the two or three parametric models: lognormal, Dagum, and Singha-Madalla. The highest incomes were described by the Pareto model. Findings: one has showed that two or three parametric models explain from about 95% to more than 99% of ranges of income distributions. The poorest agreement with data is for lognormal model, while the best agreement has been obtained for Dagum model. Regarding the highest incomes the Pareto model describe the data very well only for the selected years. For the remaining years the results are not so obvious. The tails of the income distributions seems to have more complex structure

Keywords: income distribution; incomes models; Pareto model; power law (search for similar items in EconPapers)
JEL-codes: C51 C52 D31 (search for similar items in EconPapers)
Date: 2017-05, Revised 2017-05
New Economics Papers: this item is included in nep-dcm and nep-tra
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