Is the distribution of income compatible with s stable distribution?
Working paper
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Date
1999Metadata
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- Discussion Papers [1002]
Abstract
Mandelbrot (1961) proposed to apply the class of Pareto-Levy distributions - which belong to the
Stable distributions - as a framework for modelling income distributions. He also presented theoretic
arguments in favor of the Pareto-Levy distributions. In this paper we provide additional theoretical
justification for this class of distributions. We also use micro data on individual market income to
estimate the parameters of a Pareto-Levy distribution. Several estimation methods have been
applied. The estimated Pareto-Levy distribution appears to fit the data well.