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Income Distribution, Profit, and Real Shares

13 Pages Posted: 2 Mar 2012 Last revised: 9 Jun 2014

Egmont Kakarot-Handtke

University of Stuttgart - Institute of Economics and Law

Date Written: February 28, 2012

Abstract

This paper clarifies first the nature and significance of monetary 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.

Keywords: new framework of concepts, structure-centric, axiom set, monetary profit, distributed profit, retained profit, key ratios, period core, invisible redistributor, nominal wage share, real wage share

JEL Classification: E20, E25

Suggested Citation

Kakarot-Handtke, Egmont, Income Distribution, Profit, and Real Shares (February 28, 2012). Available at SSRN: https://ssrn.com/abstract=2012793 or http://dx.doi.org/10.2139/ssrn.2012793

Egmont Kakarot-Handtke (Contact Author)

University of Stuttgart - Institute of Economics and Law ( email )

Keplerstrasse 17
Stuttgart
Germany

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