Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/71445
Authors: 
Battistin, Erich
Blundell, Richard
Lewbel, Arthur
Year of Publication: 
2007
Series/Report no.: 
IFS Working Papers, Institute for Fiscal Studies (IFS) 07/08
Abstract: 
Significant departures from log normality are observed in income data, in violation of Gibrat’s law. We identify a new empirical regularity, which is that the distribution of consumption expenditures across households is, within cohorts, closer to log normal than the distribution of income. We explain these empirical results by showing that the logic of Gibrat’s law applies not to total income, but to permanent income and to maginal utility. These findings have important implications for welfare and inequality measurement, aggregation, and econometric model analysis. – Consumption ; Income ; Lognormal ; Inequality ; Gibrat
JEL: 
D3
D12
D91
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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