Distribution of personal income: development of a new model and its application to U. S. income data

This paper proposes a four-parameter statistical model of the personalized distribution of income using the `income share elasticity' approach suggested by Esteban (1986). Our proposed model includes the Singh-Maddala (1976) and Dagum (1977) distributions as special cases. The generalized beta II distribution of McDonald (1984) is also a variant of this model. It appears to give an excellent fit to US income data and its empirical performance turns out to be superior to those of the Singh-Maddala (1976), Dagum (1977), the five-parameter Champernowne (1953) distributions and the generalized beta II distribution of McDonald (1984) on some data.