The Beta as a Model for the Distribution of Earnings

Simon Parker ()

Bulletin of Economic Research, 1999, vol. 51, issue 3, 243-51

Abstract: Existing functional forms commonly used to represent the earnings distribution have weak micro-foundations and relatively poor empirical goodness-of-fit. This paper presents an optimizing model of firm behaviour, which predicts the earnings distribution to follow the beta distribution of the second kind, a distribution known to provide a superior fit to empirical data. Copyright 1999 by Blackwell Publishing Ltd and the Board of Trustees of the Bulletin of Economic Research

Date: 1999
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