Pareto's Law for Income of Individuals and Debt of Bankrupt Companies

Details Pareto's Law for Income of Individuals and Debt of Bankrupt Companies Pareto's Law for Income of Individuals and Debt of Bankrupt Companies

2000-06-02

arxiv.org/abs/cond-mat/0006038v1

Physics

Condensed Matter

Statistical Mechanics

11 pages, 4 figures

Scientific paper

We analyze the distribution of income and income tax of individuals in Japan for the fiscal year 1998. From the rank-size plots we find that the accumulated probability distribution of both data obey a power law with a Pareto exponent very close to -2. We also present an analysis of the distribution of the debts owed by bankrupt companies from 1997 to March, 2000, which is consistent with a power law behavior with a Pareto exponent equal to -1. This power law is the same as that of the income distribution of companies. Possible implications of these findings for model building are discussed.

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