دنباله فوقانی پارتو برای توزیع درآمد سرمایه A Pareto upper tail for capital income distribution

1 Introduction The related subjects of income and wealth inequality have received considerable attention recently, both as topics of public debate and for their role in economic and social theory [32, 2]. The total income can be represented largely as the sum of the labor income and of the capital income, and their ratio is a measure of the relative weights of the two components in the GDP (the labour-capital split). The labor-capital split and its role in economic growth is a subject of intense debate nowadays [32, 24]. There is also an active interest in the study of the capital income and of its role in the theories of income distribution [32, 5]. This is due especially to the fact that the upper tail of the income distribution is dominated by capital income, and this observation motivates the increased interest in the study of the capital income and its distribution. As several authors noted [26, 32], the inequality in income distribution is significantly greater for the capital income than for other types of income. It is also worth mentioning that the capital income distribution is also important for its determinant role in the personal income inequality, as shown in [5, 15, 39]. The authors of these studies present evidence that there is a strong link between the aggregate role of capital in the economy and the distribution of income. In a recent paper [29] we presented a first study of the income distribution in Romania, using tax income data at individual level. This study included only the contributions of wages and social redistribution income (pensions, unemployment and social benefits). In this paper we complete the study of the income distribution by including also the capital income. We present an analysis of the capital income shares to the total income, and study the distribution of the capital income. Furthermore, we expand the data coverage by presenting data for income distribution in Romania for 2013-2014.The first studies of the income distribution are traced back to the work of the Italian economist Vilfredo Pareto [31] who noticed that the upper tail of the income distribution appears to be well described by a power law. This is known as Pareto distribution, and the exponent of the power law is known as the Pareto coefficient. Later studies have shown a dependence of the Pareto coefficient on the time period and country studied.