This book presents a systematic overview of cutting-edge research in the field of parametric modeling of personal income and wealth distribution, which allows one to represent how income/wealth is distributed within a given population. The estimated parameters may be used to gain insights into the causes of the evolution of income/wealth distribution over time, or to interpret the differences between distributions across countries. Moreover, once a given parametric model has been fitted to a data set, one can straightforwardly compute inequality and poverty measures. Finally, estimated parameters may be used in empirical modeling of the impact of macroeconomic conditions on the evolution of personal income/wealth distribution. In reviewing the state of the art in the field, the authors provide a thorough discussion of parametric models belonging to the "kappa-generalized" family, a new and fruitful set of statistical models for the size distribution of income and wealth that they have developed over several years of collaborative and multidisciplinary research. This book will be of interest to all who share the belief that problems of income and wealth distribution merit detailed conceptual and methodological attention.
Introduction.- The Revived Interest in the Problems of Income and Wealth Distribution.- Re-incorporating Distributional Issues Into the Main Body of Economic Analysis.- Aim and Contents of this Book.- The Parametric Approach to Income and Wealth Distributional Analysis.- The Idea of a Parametric Model for Income and Wealth Distributions.- Brief History of the Models for Studying Income and Wealth Distributions.- The kappa-Generalized Distribution.- Underlying Stochastic Process.- Empirical Results and Comparisons to Alternative Income Distributions.- The kappa-Generalized Mixture Model for the Size Distribution of Wealth.- Motivation.- Model Specification.- Moments of the kappa-Generalized Mixture Model for Net Wealth Distribution.- The Lorenz Curve and the Gini Index of the Net Wealth Distribution Model.- Empirical Results and Comparison of Finite Mixture Models for Net Wealth Distribution.- Four-Parameter Extensions of the kappa-Generalized Distribution.- Definitions and Basic Properties.- Population Characteristics.- Empirical Results and Comparisons to Alternative Four-Parameter Statistical Distributions.- Conclusions.- Appendices.- References.- Author Index.- Subject Index.
