The Anatomy of Income Distribution

Abstract

HE purpose of this article is to improve T understanding of the meaning of survey data on income, and of inequality measures derived from such data. Where possible, the data are examined to see whether conceptual distinctions or difficulties make any important differences. Short-run fluctuations of income are less important than one might think in their effects on overall inequality measures. The presence of extra earners substantially reduces inequality. Less-than-full-year work increases inequality particularly among the very young and those over 45 years old. There remains some increase in inequality with age resulting from differentials in rates of advancement. Some difficulties in interpreting survey data in terms of the distribution of welfare require new data and new analysis, the main aspects of which are briefly sketched.