DISTRIBUTION (ECONOMICS)

'Distribution' in economics refers to the way total output or income is distributed among individuals or among the factors of production (labor, land, and capital) (Samuelson and Nordhaus, 2001, p. 762). In general theory and the national income and product accounts, each unit of output corresponds to a unit of income. One use of national accounts is for classifying factor incomes and measuring their respective shares, as in . But, where focus is on income of ''persons'' or ''households'', adjustments to the national accounts or other data sources are frequently used. Here, interest is often on the fraction of income going to the top (or bottom) ''x'' percent of households, the next ''y'' percent, and so forth (say in quintiles), and on the factors that might affect them (globalization, tax policy, technology, etc.).

Contents

Descriptive, theoretical, scientific, and welfare uses

Neoclassical distribution theory

See also

Distribution of what?

Distribution theories

Classical distribution theory

Marxian distribution theory

Neoclassical distribution theory

References

External links

Descriptive, theoretical, scientific, and welfare uses

Income distribution can describe a prospectively observable element of an economy. It has been used as an input for testing theories explaining the distribution of income, for example human capital theory and the theory of economic discrimination (Becker, 1993, 1971).
In welfare economics, a level of ''feasible'' output possibilities is commonly distinguished from the distribution of income for those output possibilities. But in the formal theory of ''social'' welfare, rules for selection from feasible distributions of income and output are a way of representing normative economics at a high level of generality.

Neoclassical distribution theory

In neoclassical economics, the supply and demand of each factor of production interact in factor markets to determine equilibrium output, income, and the income distribution.
Factor demand in turn incorporates the marginal-productivity relationship of that factor in the output market. Analysis applies to not only capital and land but the distribution of income in labor markets (Hicks, 1963). In a perfectly competitive economy, market equilibrium results in ''allocative efficiency'' as to the mix of output produced and ''distributive efficiency'' in the least-cost mix of factors of production. In 1908, the efficiency properties of perfect competition were shown by Enrico Barone to be required as well for efficient resource use in collectivist planning.
The neoclassical growth model provides an account of how distribution of income between capital and labor are determined in competitive markets at the macroeconomic level over time with technological change and changes in the size of the capital stock and labor force. More recent developments of the distinction between human capital and physical capital and between social capital and personal capital have deepened analysis of distribution.

See also

★ Income distribution (quick overview: theory & policy, U.S.)
:Median household income (simplest measure of relative and absolute in income distribution)
:Income quintiles (from the top 20% on down for the U.S.)
:Household income in the United States
:Personal income in the United States

★ Economic inequality (world-wide overview; causes, effects, normative perspectives)

★ Income inequality metrics
: Gini coefficient
: Lorenz curve

Distribution of what?

★ Goods (economics)

★ Income

★ Distribution of wealth

★ Wealth

★ Wealth (economics)

Distribution theories

Classical distribution theory

★ Classical economics: value theory

Marxian distribution theory

★ Marxian economics: Marx's economic theories

★ Value product

Neoclassical distribution theory

★ Neoclassical microeconomic model of labor market demand and supply

★ Production function

★ Production, costs, and pricing

★ Production theory basics
==Normative economics of distribution==

★ Welfare economics
: Distributive justice
: Justice (economics)
: Social choice theory
: Social welfare function

References

★ A.B. Atkinson and F. Bourguignon, ed. (2000). ''Handbook of Income Distribution'', v. 1. Elsevier.table of contents

★ The Economics of Discrimination, Gary S. Becker, , , University of Chicago Press, 1971, 2nd ed., ISBN 0-226-04115-8 (UCP descr)

★ Human Capital: A Theoretical and Empirical Analysis, with Special Reference to Education., Gary S. Becker, , , University of Chicago Press, 1993, 3rd ed., ISBN 978-0-226-04120-9 (UCP descr)

★ John Bates Clark (1902). ''The Distribution of Wealth'' (analytical Table of Contents)

★ Sheldon Danziger and Peter Gottschalk (1995). ''America Unequal'', Harvard University Press, Cambridge, MA ISBN-0-674-01810-9 (book abstract)

★ Sheldon Danziger, Robert Haveman, Robert Plotnick (1981). "How Income Transfer Programs Affect Work, Savings, and the Income Distribution: A Critical Review," ''Journal of Economic Literature'' 19(3), pp. 975-1028. JUSTOR

★ Milton Friedman and Simon Kuznets (1945). ''Income from Independent Professional Practice'' NBER.

★ John R. Hicks (1932, 2nd ed., 1963). ''The Theory of Wages''. London: Macmillan.

★ Julian Lamont (2003). "Distributive Justice", ''Stanford Encyclopedia of Economics''.

★ Xavier Sala-Martin (2006)."The World Distribution of Income: Falling Poverty and… Convergence, Period,"('+' button to enlarge), ''Quarterly Journal of Economics," 121(2), May, pp. 351-397.

★ Paul A. Samuelson and William D. Nordhaus (2004). ''Economics'', 18th ed.,
:ch. 12: How Markets Determine Incomes
:ch. 13: The Labor Market
:ch. 14: Land and Capital
:ch. 14: Appendix Markets and Economic Efficiency .

★ George J. Stigler (1941). ''Production and Distribution Theories'' (analytical exposition of successive contributions by ten neoclassical economists, 1870-95) New York: Macmillan. Ch. previews.

★ Philip H. Wicksteed (1914). “The Scope and Method of Political Economy in the Light of the ‘Marginal’ Theory of Value and Distribution," ''Economic Journal,'' 24(94), pp. 1-23.

★ U.S. Census Bureau ([1999] 2004). "Income Inequality (1947-1998)."
The following are some ''distribution'' entries from ''The '' (1987):

★ "distribution, law of," v. 1, pp. 869-72, by J.B. Clark [1926].

★ "distribution theories, classical," v. 1, pp. 872-876, by Luigi Pasinetti.

★ "distribution theories, Keynesian," v. 1, pp. 876-78, by Mauro Baranzini.

★ "distribution theories, Marxian," v. 1, pp. 878-883, by David M. Gordon.

★ "distribution theories, neoclassical," v. 1, pp. 883-886, by Christopher Bliss.

★ "distributive justice," v. 1, pp. 886-88, by Edmund S. Phelps.

★ "imputation," v. 2, pp. 838-39, by Murray N. Rothbard.

★ "inequality between persons," v. 2, pp. 821-24, by Anthony F. Shorrocks.

★ "interest and profit," v. 2, pp. 877-79, by Carlo Panico.

★ "marginal productivity theory," v. 3, pp. 323-25, by Robert F. Dorfman.

★ "profit and profit theory," v. 3, pp. 1014-21, by Meghnad Desai.

★ "wages, real and money," v. 4, pp. 840-42, by Henry Phelps Brown.

External links

★ Frank Levy (1993). "Distribution of Income, ''The Concise Encyclopedia of Economics''.

★ The Neoclassical Theory of Distribution from The New School

★ U.S. National income by type of income, 1959-2005 ('+' button to enlarge) from 2006 Economic Report of the President via Federal Reserve Bank of St. Louis.