Top income measurement and undistributed profits

We develop a method that allows transforming retained business profits in a particular year into business-accrued capital gains of the same year. These capital gains thus estimated can be simply added to other sources of personal income of top earners to obtain a consistent measure of their total in...

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Bibliographic Details
Published in:Economics letters 2015-09, Vol.134, p.138-140
Main Authors: Gutiérrez C., Pablo, López, Ramón E., Figueroa B., Eugenio
Format: Article
Language:English
Subjects:
Business-accrued capital gains
Capital gains
Corporate profits
Earnings
Estimating techniques
Income
Pareto distribution
Personal income
Profit
Studies
Top income distribution
Undistributed profits
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Summary:We develop a method that allows transforming retained business profits in a particular year into business-accrued capital gains of the same year. These capital gains thus estimated can be simply added to other sources of personal income of top earners to obtain a consistent measure of their total income. •Simply adding retained profits to other personal incomes is in general incorrect.•Proposes a method to transform retained profits into business-accrued capital gains.•Shows sufficient conditions for business-accrued capital gains to distribute Pareto.
ISSN:0165-1765
1873-7374
DOI:10.1016/j.econlet.2015.07.013