Economic Policy Visualization

Income · Geometries

Dr. Matthias Schnetzer

October 28, 2024

Distribution of income in economic policy

Income (compensation for labor and investment) is
- production cost in supply-side approach
- determinant for consumption in demand-side approach
In neoclassical economics, income inequality arises from differences in marginal productivity and might stimulate economic growth due to differential savings rates (and thus loanable funds), investment, and incentives for effort (Josifidis/Supic, 2018).
In (Post-)Keynesian economics, income inequality is the result of institutional settings, power relations, etc. Inequality harms economic growth in most of these models due to detrimental effects on aggregate demand (Kurz/Salvadori, 2010).

Functional income distribution

Functional distribution

Income accounts in the System of National Accounts show primary (from production) and secondary (from redistribution) income flows. It is also the base for functional distribution:

Gross domestic product (GDP) at market prices
\(+\) Primary incomes receivable from the rest of world
\(-\) Primary incomes payable to the rest of world

\(=\) Gross national income (GNI) at market prices
\(-\) Consumption of fixed capital

\(=\) Net national income at market prices
\(-\) Taxes on products
\(+\) Subsidies on products

\(=\) Net national income at factor cost

← Rest of World

← Depreciation

← Government

← Production factors

Income accounts for Austria, 2021

Wage share = Compensation of Employees / Net national income at factor cost

Functional income distribution in Continental Europe

Functional distribution in Anglosaxon countries

Personal income distribution

Personal income inequality

Historical development of global personal inequality: 3 views

Global inequality 1820-2020

Decomposition of global inequality

Show me your geometries!

Selected geometries in {ggplot}

	Geometry	Explanation
	area, ribbon	An area plot is the continuous analogue of a stacked bar chart.
	bar, col	Bar charts may be proportional (bar) or with absolute values (col).
	boxplot	The boxplot compactly displays the distribution of a continuous variable.
	density, histogram	Kernel density plot, which is a smoothed version of the histogram.
	hline, vline, abline	Draws a horizontal or vertical line with an intercept or a line with a slope.
	line, path	Line between observations in order of variable (line) or appearance (path)
	linerange, errorbar	Various ways of representing a vertical interval defined by x, ymin and ymax.
	point, jitter	The point geom is used to create scatterplots and jitter avoids overplotting.
	segment, curve	Draws a straight or curved line between points (x,y) and (xend, yend).
	smooth	Smoothed line with standard error bounds across a scatterplot.
	violin	A violin plot is a compact display of a continuous distribution.

Additional geometries

ggstream::geom_stream()

waffle::geom_waffle()

ggchicklet::geom_chicklet()

ggridges::geom_density_ridges()

ggsankey::geom_sankey()

ggbump::geom_bump()

Bibliography

Chancel, Lucas/Piketty, Thomas/Saez, Emmanuel/Zucman, Gabriel (2022). World inequality report 2022. World Inequality Lab.

Josifidis, Kosta/Supic, Novica (2018). Institutionalist Versus Neoclassical View on Income Distribution and Economic Progress: The OECD Panel Evidence. Panoeconomicus, 65(3), 319–337. DOI: 10.2298/pan1803319j

Kurz, Heinz D./Salvadori, Neri (2010). The Post-Keynesian Theories of Growth and Distribution: A Survey. In Setterfield, Mark (Ed.), Handbook of alternative theories of economic growth. Edward Elgar Publishing. DOI: 10.4337/9781849805582.00010

Stockhammer, Engelbert (2015). Determinants of the Wage Share: A Panel Analysis of Advanced and Developing Economies. British Journal of Industrial Relations, 55(1), 3–33. DOI: 10.1111/bjir.12165