ERIC Number: ED079510
Record Type: RIE
Publication Date: 1972-Jan
Long Term Change in Personal Income Distribution: Theoretical Approaches, Evidence and Explanations.
Schultz, T. Paul
The paper discusses various models and theories of personal income distribution inequality. The first section presents the logic for adopting one conceptual and statistical approach in measuring and analyzing income inequality and the second presents empirical evidence on income inequality from 1939 to 1970. A brief survey of the human capital literature and a resume of long-term trends in personal income distribution round out the paper. Although cyclical behavior of income inequality has been linked to aggregate indices of demand, economic explanations of this change are unsatisfactory. The most promising theoretical start is the human capital earnings distribution model, but it does not cope adequately with the complexity of the process underlying observed time allocation and annual income inequality. A reappraisal of our progress toward equalizing economic opportunities may be warranted. Variation in annual earnings inequality arises from the interaction of supply and demand factors that affect both the personal allocation of time to market activity and wage rates as influenced by life cycle human capital investments. An integrated explanation of this process does not now exist, although the conceptual and econometric framework for it is beginning to emerge. (MF)
Publication Type: N/A
Education Level: N/A
Authoring Institution: Rand Corp., Santa Monica, CA.