Volume 6, Number 1 (Winter) 1971
Newhouse, Joseph P. 1971. "A Simple Hypothesis of Income Distribution." Journal of Human Resources 6(1):51-74.
Income distributions across American cities have remarkably different shapes. This article attempts to explain that observation. After a brief review of the income distribution literature, a theory of an area's income distribution is proposed which can account for the dissimilar shapes. The theory focuses upon the industry mix of an area and ignores other factors. For reasons of data availability, the theory is tested using data from states. Approximately 88 percent of the variance is explained, which lends support to the hypothesis that factors other than industry mix do not strongly affect the shape of the income distribution or are correlated with industry mix.
The author is in the Economics Department, The RAND Corporation, Santa Monica, California. Any views expressed in this article are those of the author. They should not be interpreted as reflecting the views of the RAND Corporation or the official opinion or policy of any of its governmental or private research sponsors.
© 2003 by the Board of Regents of the University of Wisconsin System
US ISSN 0022-166X