Scaling in income inequalities and its dynamical origin

Zoltán Néda, István Gere, Tamás S. Biró, Géza Tóth and Noemi Derzsy

Physica A: Statistical Mechanics and its Applications, 2020, vol. 549, issue C

Abstract: We provide an analytically treatable model that describes in a unified manner income distribution for all income categories. The approach is based on a master equation with growth and reset terms. The model assumptions on the growth and reset rates are tested on an exhaustive database with incomes on individual level spanning a nine year period in the Cluj county (Romania). In agreement with our theoretical predictions we find that income distributions computed for several years collapse on a master-curve when a properly normalised income is considered. The Beta Prime distribution is appropriate to fit the collapsed data and it is shown that distributions derived for other countries are following similar trends with different fit parameters. The non-universal feature of the fit parameters suggests that for a more realistic modelling the model parameters have to be linked with specific socio-economic regulations.

Date: 2020
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Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:phsmap:v:549:y:2020:i:c:s0378437120302156

DOI: 10.1016/j.physa.2020.124491

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