Editing Income distribution (section)

== About ==
[[Classical economist]]s such as [[Adam Smith]] (1723–1790), [[Thomas Malthus]] (1766–1834), and [[David Ricardo]] (1772–1823) concentrated their attention on factor income-distribution, that is, the [[Distribution (economics)|distribution]] of [[income]] between the primary [[factors of production]] ([[Land (economics)|land]], [[Labour economics|labour]] and [[Capital (economics)|capital]]). Modern economists have also addressed issues of income distribution, but have focused more on the distribution of income across individuals and households. Important theoretical and policy concerns include the balance between income inequality and [[economic growth]], and their often inverse relationship.<ref>{{Cite web|url= https://www.imf.org/external/pubs/ft/sdn/2014/sdn1402.pdf |title= Redistribution, Inequality, and Growth {{!}} Data|website= imf.org|access-date= 18 August 2020 | pages = 25–26 | quote = ...  inequality continues to be a robust and powerful determinant both of the pace of medium-term growth and of the duration of growth spells, even controlling for the size of redistributive transfers. ... [T]here is surprisingly little evidence for the growth-destroying effects of fiscal redistribution at a macroeconomic level. ... [F]or non-extreme redistributions, there is no evidence of any adverse direct effect. The average redistribution, and the associated reduction in inequality, is thus associated with higher and more durable growth. }}</ref>

The [[Lorenz curve]] can represent the distribution of income within a society. The Lorenz curve is closely associated with measures of [[income inequality]], such as the [[Gini coefficient]].

=== Measurement ===
{{Main article|Income inequality metrics}}
[[File:Shares of Income 2016 CBO.png | thumb| upright=1.5 | Income before (green) and after (pink) taxes and [[Transfer payment]]s for different income groups starting with the lowest quintile. Top 20% people take approximately 45% of the all income.]]
The concept of inequality is distinct from that of poverty<ref>For poverty see [[Foster Greer Thorbecke|FGT metrics]].</ref> and [[distributive justice|fairness]]. Income inequality metrics (or income distribution metrics) are used by social scientists to measure the distribution of [[income]], and [[economic inequality]] among the participants in a particular economy, such as that of a specific country or of the world in general. While different theories may try to explain how income inequality comes about, income inequality metrics simply provide a [[Systems of measurement|system of measurement]] used to determine the dispersion of incomes.

Gini Coefficient: A measure that represents the income or wealth distribution among a nation's residents, with 0 expressing perfect equality and 1 indicating perfect inequality.
Lorenz Curve: A graphical representation of income distribution, where a perfectly straight line (45-degree line) reflects absolute equality.
Quintile and Decile Ratios: These divide the population into equal parts (quintiles - fifths, deciles - tenths) to compare the income shares received by each group.

===Economic Theories and Government Policies===
Various economic theories address income distribution, from classical economics, which tends to focus on market mechanisms, to Keynesian economics, which emphasizes the role of government intervention. Policies to influence income distribution include:

Progressive Taxation: Taxing higher incomes at higher rates to redistribute income more evenly.
Public Spending: Directing government expenditure towards education, healthcare, and social security to support lower-income groups.
Wage Policies: Implementing minimum wage laws and encouraging collective bargaining to improve wages for low- and middle-income workers.
International Perspectives on Income Distribution
Income distribution varies greatly around the world. Comparing countries through tools like the World Income Inequality Database (WIID) or the Standardized World Income Inequality Database (SWIID) can provide insights into global patterns and the effectiveness of different policies.

Trends and Current Data
Recent trends in income distribution show increasing income inequality in many parts of the world. This trend has been exacerbated by globalization and changes in the global economy. Current data from sources like the OECD can be used to update the article with the latest figures and trends.

==== Neoclassical theory of distribution ====
According to this theory, the distribution of national income is determined by factor prices, the payment to each factor of production (wage for labor, rent for land, interest for capital, profit for entrepreneurship) which themselves are derived from the equilibrium of supply and demand in that factor's market, and finally, are equal to the marginal productivity of the factors of production. A change in the quantity of any one of the factors will affect the marginal production, supply and demand of factors and eventually alter the income distribution from firms to households within the economy.<ref>{{Cite book |last=MANKIW |first=N. GREGORY |title=MACROECONOMICS |date=22 May 2015 |isbn=978-1-4641-8289-1 |edition=9th |pages=47–80|publisher=Macmillan Learning }}</ref>

=== Limitations ===
There exist some problems and limitations in the measurement of inequality as there is a large gap between the national accounts (which focus on [[Macroeconomics|macroeconomic]] totals) and inequality studies (which focus on [[Distribution of wealth|distribution]]).

The lack of a comprehensive measure about how the pretax income differs from the post-tax income makes hard to assess how government redistribution affects inequality.

There is not a clear view on how long-run trends in income concentration are shaped by the major changes in woman's labour force participation.