Income distribution

This graphic shows the distribution of gross annual household income. The building's thirty exposed floors are easily divided into quintiles; each income quintile is thereby represented by six floors. Each floor represents the tenth of a third (3.33%) of households in the US and each section of 10 floors represent roughly one third of American society. The floors above the top black line represent those households with incomes of or exceeding $100,000. The floors below the bottom black line, however, represent those households that fell below the poverty threshold. In order to live on the top floor of the American income strata, a household's annual gross income needs to exceed $200,000.

In economics, income distribution is how a nation’s total economy is distributed amongst its population. ^[1].Income distribution has always been a central concern of economic theory and economic policy. Classical economists such as Adam Smith, Thomas Malthus and David Ricardo were mainly concerned with factor income distribution, that is, the distribution of income between the main factors of production, land, labour and capital.

Modern economists have also addressed this issue, but have been more concerned with the distribution of income across individuals and households. Important theoretical and policy concerns include the relationship between income inequality and economic growth.

The distribution of income within a community may be represented by the Lorenz curve. The Lorenz curve is closely associated with measures of income inequality, such as the Gini coefficient.

Income distribution in the United States

In the United States, income is distributed somewhat inequally, with those in the top two quintiles earning more than the bottom 60% combined. Yet, the distribution of income is not nearly as polarized as in many developing countries with most of America's earned income resting in the hands of the middle class.^{[citation needed]}

This takes no data into consideration other than income relative to population. It does not take into consideration the turnover of individuals within income each bracket. A University of Michigan study^{[citation needed]} found that over a seven year period, less than half of the families followed remained in the same bracket they started in. Over half of the households labeled as "poor" had air conditioning, cars and 20,000 had a heated swimming pool or Jacuzzi.^{[citation needed]}

See also

Business and economics portal

• Income inequality metrics
• Median household income
• Household income in the United States
• Personal income in the United States
• Income quintiles
• Affluence in the United States
• Six figure income
• Poverty in the United States

External links

• The Polarization of the U.S. Labor Market, economics.harvard.edu
• U.S. Census Bureau ([1999] 2004). "Income Inequality (1947-1998)."

References

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