The exponential Pareto model with hidden income processes: Evidence from Chile

2021. Physica A: Statistical Mechanics and its Applications. Volume 561, 1 January 2021, 125196

R. Gutierrez M, Pablo Tapia G, J. Diaz R

Abstract:

Building on the two-class income model (Banerjee and Yakovenko, 2010), this paper proposes a new methodology to estimate the income distribution that accounts for hidden sources of income, such as retained earnings. We promote and illustrate this methodology with a case study of the Chilean economy. Our results reveal that after including the hidden sources of income, economic inequality in Chile has remained relatively constant over the last 15 years.

Palabras claves: Two-class income modelHidden income processesPareto distributionRetained earnings

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