Abstract
Models of income distribution more or less succeed in linking the current level of household (or individual) income to household (or individual) characteristics. However, they are typically far less satisfactory in explaining income dynamics. Gibrat’s model proves helpful in highlighting the predominant role of randomness in the short run (here, 2–4 years), and this explains why other systematic influences are difficult to identify. One empirical regularity that does emerge, however, is that small incomes tend to increase more, and with more variability, than large ones. The traditional version of Gibrat’s model does not incorporate this peculiarity, but this shortcoming can be overcome with a relatively minor modification of the original model.
Access this chapter
Tax calculation will be finalised at checkout
Purchases are for personal use only
References
Fields, G.S., Duval Hernández, R.D., Freije Rodríguez, S.F., Sánchez Puerta, M.L.: Income Mobility in Latin America, mimeo (2006). http://www.cid.harvard.edu/Economia/Mexico06\%20Files/fieldsetal\%20102306.pdf
Gibrat, R.: Les inégalités économiques: applications aux inégalité des richesses, à la concentration des entreprises, aux populations des villes, aux statistiques de familles, etc., d’une loi nouvelle, la loi de l’effet proportionnel, Librerie du Recueil Sirey, Paris (1931)
Hart, P.E.: The comparative statics and dynamics of income distributions. J. R. Stat. Soc. A Gen. 139(1), 108–125 (1976)
Kalecki, M.: On the Gibrat distribution. Econometrica 13(2), 161–170 (1945)
Mitzenmacher, M.: A brief history of generative models for power law and lognormal distributions. Internet Math. 1(2), 226–251 (2003)
Neal, D., Rosen, S.: Theories of the distribution of earnings. In: Atkinson, A.B., e Bourguignon, F. (eds.) Handbook of Income Distribution, vol. 1, Chapter 7, pp. 379–427. Elsevier, London (2000)
Salinari, G., De Santis, G,: On the Evolution of Household Income, Luxemb. Income Study Work. Pap. Ser., No. 488, July (2008)
Salinari, G., De Santis, G.: The evolution and distribution of income in a life-cycle perspective. Riv. Ital. di Econ. Demogr. e Stat. 63(1–2), 257–274 (2009)
Shorrocks, A.F.: Income mobility and the markov assumption. Econ. J. 86(343), 566–578 (1976)
Acknowledgements
Financial support from the Italian MIUR and from the EU is gratefully acknowledged.
Author information
Authors and Affiliations
Corresponding author
Editor information
Editors and Affiliations
Rights and permissions
Copyright information
© 2013 Springer-Verlag Berlin Heidelberg
About this chapter
Cite this chapter
De Santis, G., Salinari, G. (2013). The Determinants of Income Dynamics. In: Torelli, N., Pesarin, F., Bar-Hen, A. (eds) Advances in Theoretical and Applied Statistics. Studies in Theoretical and Applied Statistics(). Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-642-35588-2_44
Download citation
DOI: https://doi.org/10.1007/978-3-642-35588-2_44
Published:
Publisher Name: Springer, Berlin, Heidelberg
Print ISBN: 978-3-642-35587-5
Online ISBN: 978-3-642-35588-2
eBook Packages: Mathematics and StatisticsMathematics and Statistics (R0)