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'''Income distribution''' refers to the way total income is divided among individuals, households, or factors of production. It is studied both in terms of functional distribution, the division of income between labour, capital, and land, and personal distribution, the distribution of income across households. The subject is central to welfare economics, to the analysis of growth and development, and to policy debates about inequality and redistribution.

== Measurement ==
Personal income distribution is typically measured using survey data or administrative records. Summary measures include the Gini coefficient, which ranges from zero for perfect equality to one for perfect inequality, and the ratio of the income share of the top decile to that of the bottom decile. Lorenz curves depict the cumulative share of income received by cumulative shares of the population.

Measurement raises difficult issues. Survey data may underreport top incomes and informal income. Administrative tax data capture top incomes more accurately but may miss those below the tax threshold. Adjusting for taxes, transfers, and household size changes the picture, and comparisons across countries require consistent definitions.

== Determinants ==
Income distribution is determined by the distribution of endowments, including skills, wealth, and access to opportunities, and by the returns to those endowments. Labour market institutions, such as minimum wages and union coverage, affect wage dispersion. Technological change, trade, and the structure of demand influence the relative returns to different types of labour and capital.

Wealth distribution is typically more unequal than income distribution and reinforces it, since wealth generates income and can be transmitted across generations. Education, inheritance, and access to credit shape the persistence of advantage and disadvantage.

== Trends and Debates ==
Inequality has risen in many advanced economies since the 1980s, driven by changes in technology, globalisation, and institutions. The share of income accruing to the top of the distribution has increased, while the share of labour in national income has fallen in some countries. Trends in developing economies are more varied, with some experiencing rapid growth and declining inequality and others the opposite.

Debates concern the causes of these trends, the appropriate role of policy, and the effects of inequality on growth, mobility, and social outcomes. Some argue that inequality harms growth and stability; others emphasise its incentive effects and the importance of mobility rather than the level of inequality itself.

== Policy ==
Policies to influence income distribution include progressive taxation, social transfers, minimum wages, investment in education and health, and measures to broaden access to opportunity. The design of these policies involves trade-offs among equity, efficiency, and administrative feasibility, and their effects depend on the institutional context.

== Functional Distribution ==
The functional distribution of income refers to the division of national income among the factors of production, principally labour and capital. The labour share, the fraction of national income paid as compensation to employees, has declined in many economies since the 1980s, a trend attributed to technological change, globalisation, and changes in market power and institutions.

The decline of the labour share matters for personal distribution, because labour income is more evenly distributed than capital income. A falling labour share tends to raise inequality, unless offset by other factors such as progressive transfers.

== Wealth and Its Transmission ==
Wealth is more unequally distributed than income and plays a central role in the persistence of inequality. Wealth generates income, and it can be transmitted across generations through inheritance and gifts, as well as through investments in education and networks. The accumulation and transmission of wealth can therefore perpetuate advantage across generations.

Estimates of wealth distribution rely on surveys that often underreport wealth at the top, supplemented by administrative data, including estate tax records and capitalised income flows. The resulting estimates suggest that the concentration of wealth is high and, in some countries, rising.

== Mobility ==
The study of intergenerational mobility examines the extent to which income and status persist across generations. High mobility means that origin matters little for destination; low mobility means that advantage and disadvantage are transmitted. Mobility is influenced by education, family background, and the structure of the labour market.

Comparisons across countries find substantial variation in mobility, with the Nordic countries generally exhibiting higher mobility and some others lower. The relationship between inequality and mobility is contested, but several studies find that more unequal societies tend to have lower mobility, a pattern sometimes described as the Great Gatsby curve.

== Global Inequality ==
Global inequality, the distribution of income among all individuals worldwide, has been shaped by the rapid growth of large emerging economies. Between-country inequality has declined as poor countries have grown, while within-country inequality has risen in many places. The net effect on global inequality depends on the relative magnitudes and remains debated.

== Policy Instruments ==
Policies that affect income distribution include progressive taxation, cash transfers, in-kind provision of education and health, minimum wages, and labour market regulation. The design of these policies involves trade-offs, and their effects depend on the institutional context and on behavioural responses. Debates about the optimal degree of redistribution reflect differing values as well as differing assessments of the evidence.

== See also ==
* [[Income inequality]]
* [[Welfare economics]]
* [[Labour economics]]

== References ==

<ref name="r1">Research on the measurement and determinants of income distribution.</ref>
<ref name="r2">Studies of inequality trends and their causes.</ref>
<ref name="r3">Analyses of redistribution and social policy.</ref>

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[[Category:Income inequality]]
[[Category:Labour economics]]
[[Category:Welfare economics]]