A Systematic Approach to the Generation of Income Distribution Models

Abstract

Since Pareto specified in 1895 his Type I model, scores of income distribution models have been proposed. In this study, almost all of these models are organized in three generating systems. The foundations of these system specifications and the basic properties that probability distribution functions should fulfill to be entertained as income distribution models are presented and analyzed. Their main scope is to guide the researchers to the choice of an appropriate and robust model to describe observed income distributions in different epochs and countries with different state of socioeconomic development, and according to several socioeconomic attributes of the observed populations.