Income distribution patterns from a complete social security database
N. Derzsy, Z. Neda, M.A. Santos

TL;DR
This study analyzes income distribution patterns over nine years in Romania using comprehensive social security data, confirming Pareto's law at high incomes and exponential distribution at lower incomes, while examining income dynamics.
Contribution
First extensive longitudinal analysis of Romanian income distribution using complete social security data, validating Pareto's law and exploring income dynamics over time.
Findings
Pareto's law holds with stable exponents around 2.5 across years
Income distribution at low/medium levels is exponential
Income dynamics show strong fluctuations and multiplicative growth patterns
Abstract
We analyze the income distribution of employees for 9 consecutive years (2001-2009) using a complete social security database for an economically important district of Romania. The database contains detailed information on more than half million taxpayers, including their monthly salaries from all employers where they worked. Besides studying the characteristic distribution functions in the high and low/medium income limits, the database allows us a detailed dynamical study by following the time-evolution of the taxpayers income. To our knowledge, this is the first extensive study of this kind (a previous japanese taxpayers survey was limited to two years). In the high income limit we prove once again the validity of Pareto's law, obtaining a perfect scaling on four orders of magnitude in the rank for all the studied years. The obtained Pareto exponents are quite stable with values…
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Taxonomy
TopicsComplex Systems and Time Series Analysis · Economic theories and models
