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Linking functional with personal income distribution: a stock-flow consistent approach

Dafermos, Yannis; Papatheodorou, Christos

Authors

Christos Papatheodorou



Abstract

© 2015 Taylor & Francis. This paper develops a benchmark stock-flow consistent model that links functional with personal income distribution. The model consists of various household groups that receive income from different sources or from the same sources in different proportions. The dynamic linkage between functional and personal income distribution is formulated as part of a complete macroeconomic system. Inequality decomposition techniques are employed to associate income sources with personal income distribution. Simulation exercises are conducted to reveal the various ways through which functional and personal income distribution interact. In the simulations, a rise in the exogenous component of low-skilled workers’ wage share reduces inequality in the short run; in the medium to long run inequality starts increasing due to certain macroeconomic developments, but remains lower than its initial level in almost all cases. A change in functional income distribution due to a rise in the dividend payout ratio of firms increases inequality both in the short run and the long run.

Citation

Dafermos, Y., & Papatheodorou, C. (2015). Linking functional with personal income distribution: a stock-flow consistent approach. International Review of Applied Economics, 29(6), 787-815. https://doi.org/10.1080/02692171.2015.1054365

Journal Article Type Article
Publication Date Jan 1, 2015
Journal International Review of Applied Economics
Print ISSN 0269-2171
Electronic ISSN 1465-3486
Publisher Taylor & Francis (Routledge)
Peer Reviewed Peer Reviewed
Volume 29
Issue 6
Pages 787-815
DOI https://doi.org/10.1080/02692171.2015.1054365
Keywords functional income distribution, personal income distribution, stock-flow consistent modelling
Public URL https://uwe-repository.worktribe.com/output/841549
Publisher URL http://dx.doi.org/10.1080/02692171.2015.1054365
Additional Information Additional Information : This is an Accepted Manuscript of an article published by Taylor & Francis in International Review of Applied Economics on 29 June 2015, available online: http://wwww.tandfonline...0/02692171.2015.1054365

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