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Modelling of annual European Union household incomes by using an equilibrium solution of the threshold Fokker-Planck equation

Maciej Jagielski ,  Ryszard Kutner 

Warsaw University, Faculty of Physics, Hoża 69, Warszawa 00-681, Poland


We derived, in the frame of the threshold nonlinear Langevin dynamics and its threshold Fokker-Planck counterpart, a unified formula for description of the annual income of households, for instance, for the European Union in 2006 and 2008. Our formula is more generic than the well known that of Yakovenko as it is valid (by varying driving parameters) for all society classes, including the high-income class. This single unified formula well describes known stylised income facts. That is, it gives the Boltzmann-Gibbs income distribution for the low-income society class and the weak Pareto law for the middle-income class as it expected, while it predicts (to satisfactory approximation) the Zipf law, as expected, for the high-income class. 


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Related papers

Presentation: Oral at 6 Ogólnopolskie Sympozjum "Fizyka w Ekonomii i Naukach Społecznych", by Maciej Jagielski
See On-line Journal of 6 Ogólnopolskie Sympozjum "Fizyka w Ekonomii i Naukach Społecznych"

Submitted: 2012-01-05 20:40
Revised:   2012-01-05 20:40