Income distribution, profit, and real shares

Kakarot-Handtke, Egmont (2012): Income distribution, profit, and real shares.

Abstract

This paper clarifies first the nature and significance of financial profit by applying the structural axiom set as consistent point of departure. As a crucial result the fundamental theorem of income distribution emerges. It states: profit is no factor income. Since the individual firm is blind to this structural fact it subjectively interprets profit as some kind of reward. As a matter of fact, firms do not ‘make’ profit, they only redistribute it among themselves. With profit consistently defined it is possible to determine the nominal and real shares of the elementary income categories wage income and distributed profit.

• Item Type: MPRA Paper
• Language: English
• Keywords: new framework of concepts; structure-centric; axiom set; financial profit; distributed profit; retained profit; key ratios; period core; invisible redistributor; nominal wage share; real wage share
• Subjects: E - Macroeconomics and Monetary Economics > E2 - Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy > E25 - Aggregate Factor Income Distribution; E - Macroeconomics and Monetary Economics > E2 - Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy > E20 - General

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