Conic Distributions of Earned Incomes
Since Pareto (1897) discovered the functional form of the distribution of high incomes efforts have been made to find a form that covers the entire income range. As was true of Pareto’s own work, most of these efforts were descriptive in the sense of looking for a distribution that would fit a set of data believed to be representative. Important steps in the search for appropriate distributions were the introduction of the generalized gamma for this specific purpose (Amoroso, 1925) and the application of the log normal (Gibrat, 1931) and stable distributions (Mandelbrot, 1960; Zolotarev, 1986.). An empirical comparison of the large family of distributions by McDonald (1984) served to clarify their respective merits; thus, he reported poor performance of the log normal.