Power Law Tails in the Italian Personal Income Distribution

Fabio Clementi () and Mauro Gallegati ()

Microeconomics from EconWPA

Abstract: We investigate the shape of the Italian personal income distribution using microdata from the Survey on Household Income and Wealth, made publicly available by the Bank of Italy for the years 1977-2002. We find that the upper tail of the distribution is consistent with a Pareto power-law type distribution, while the rest follows a two-parameter lognormal distribution. The results of our analysis show a shift of the distribution and a change of the indexes specifying it over time. As regards the first issue, we test the hypothesis that the evolution of both gross domestic product and personal income is governed by similar mechanisms, pointing to the existence of correlation between these quantities. The fluctuations of the shape of income distribution are instead quantified by establishing some links with the business cycle phases experienced by the Italian economy over the years covered by our dataset.

Keywords: Personal income; Pareto law; Lognormal distribution; Income growth rate; Business cycle (search for similar items in EconPapers)
JEL-codes: D1 D2 D3 D4 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-eec
Date: 2005-05-18
Note: Type of Document - pdf; pages: 8
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Related works:
Working Paper: Power Law Tails in the Italian Personal Income Distribution (2004)
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Persistent link: http://EconPapers.repec.org/RePEc:wpa:wuwpmi:0505005

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