title: Income dynamics with a stationary double Pareto distribution.
abstract: Once controlled for the trend, the distribution of personal income appears to be double Pareto, a distribution that obeys the power law exactly in both the upper and the lower tails. I propose a model of income dynamics with a stationary distribution that is consistent with this fact. Using US male wage data for 1970-1993, I estimate the power law exponent in two ways--(i) from each cross section, assuming that the distribution has converged to the stationary distribution, and (ii) from a panel directly estimating the parameters of the income dynamics model--and obtain the same value of 8.4.
authors: Department of Economics, Yale University, 28 Hillhouse Avenue, New Haven, Connecticut 06511, USA. alexisakira.toda@yale.edu
authors: Alexis Akira
authors: AA
authors: Toda