The Pareto Law of Incomes - an Explanation and an

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• • • •
••
•
••
•
•
•
•
100000
•
•
•
•
•
•
5000
10000
50000
Cell mid-point ($)
Sri Lanka - 6 mos. Household Income 1981
log scales
Bohemia - Personal Income 1933
log scales
• • ••
•
•
•
•
•
•
•
•
Density(%)
0.050 0.100
•
•
•
•
•
•
•
•
•
0.050
•
•
•
•
•
•
0.005
0.005 0.010
•
Cell mid-point ($)
•
Densty
•
5.000
0.500 1.000
50000
•
0.0006 0.00080.0010
••
10000
•
0.500
0.5 0.6 0.7 0.8 0.9
Density
•
5000
•
Densiy (%)
•
•
Canada - Personal Earnings 1996
log scales
0.0020
•
0.0030
U.S. Household Income 1997
log scales
•
500
1000
5000
10000
50000
Cell mid-point (Rps.)
•
5
10
50
Cell mid-point (000 Kr.)
-
100
Canada 1996
Sri Lanka 1981
Bohemia 1933
50
5
10
20
5000
20
30
Cum. freq. below
100
50
Cum. freq. below
40
30
Cum. freq. below
10000
Cumm. freq. below
50
40
60
70
500
USA 1997
5000
7000
20000
30000
5000
8000
20000
600
800
Earnings
2000
6
7
8
Income
9
10
Income
Cumm. freq. above
1.0
Cumm. freq. above
Cumm. freq. above
0.5
8
10
9
100
10
Cumm. freq. above
500
20
5.0
1000
Income
80000
90000
Income
100000
40000
50000
60000
20000
Income
30000
Income
-
50000
40
50
60
80
100
Income
Probability density
Probability density
beta > 1
Income
Income
-
Probability density
Probability density
beta < 1
Income
Income
Observed and fitted densities
Observed and fitted densities
in log scales
• • • ••
•
••
•
•
••
•
•
•
•
0.5
1.0
Density
1.0
••
•
0.0
0.5
Density
1.5
•
0
50000
100000
150000
5000
50000 100000
Class mid-point ($)
Observed vs. fitted cell frequencies
in log scales
Q-Q plot
in log scale
5000
• •
••
•
•
•
•
•
•
•
5000
10000
•
•
•
•
•
10000
50000
Fitted quantiles
--
•
••
••
•
5000
Fitted frequency
•
•
•
• •
•
••
•
5000 10000
Upper cell limit
10000
• ••••
•• •
50000 100000
Income ($)
•
Observed frequency
10000
100000
0.0
Density
0.001 0.002
0
20000
40000 60000
Income ($)
80000 100000
Density
0.00060.0009
0.00200.0030
Obseved and fitted densities - log scales
0.003
Obseved and fitted densities
•
•
•
•
•
•
•
1000
•
•
•
• •
•• •
• •
•
4
6
8
10
12
Fitted frequency
14
5000 10000
Class mid-point ($)
50000
Q-Q plot - log scales
Observed quantiles
5000 10000
50000
Observed frequency
4 6 8 10 12 14 16
Obsd. vs. fitted frequencies - log scales
•
• • •
•
16
•
•
•
•
•
•
•
5000
-<
•
•
••
10000
Fitted quantiles
50000
Obseved and fitted densities - log scales
0.500
Density
0.0 0.2 0.4 0.6 0.8 1.0
Obseved and fitted densities
•
•
• •• • •
•
•
•
Density
0.050
•
•
•
•
•
•
•
20000
40000
Income (Rps)
0.005
0
•
60000
•
500 1000
500010000
Class mid-point (Rps)
•• •
•
•
•
• •
•
••••
Q-Q plot - log scales
•
•
•
•
5
10
50 100
Fitted
frequency
Observed quantiles
5001000
5000
50000
Observed frequency
5 10
50 100
500
Obsd. vs. fitted frequencies - log scales
50000
500 1000
•
•
•
••
• •
•
•
•
500 1000
-,
•
•
• •
••
••
•
5000 10000
Fitted
quantiles
50000
Obseved and fitted densities - log scales
•
•
•
•
•
•
•
0.005
0
0
50
100
150
1
200
5
10
50 100
Class mid-point (000 Kr)
Obsd. vs. fitted frequencies - log scales
• •
•
•
•
0.5
•
•
••
1.0
5.0 10.0
Fitted frequency
•
•
•
•
•
5
-.
•
•
5
•
• •
•
Q-Q plot - log scales
Observed quantiles
10
50 100
•
•
•
Income (000 Kr)
Observed frequency
0.5 1.0
5.010.0
•
•
Density
0.050 0.500
4
2
Density
6
5.000
Obseved and fitted densities
10
50
Fitted quantiles
100
•
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