Preprint Article Version 1 Preserved in Portico This version is not peer-reviewed

Exponential Income Distribution and Evolution of Unemployment Compensation in the United Kingdom

Version 1 : Received: 14 July 2021 / Approved: 15 July 2021 / Online: 15 July 2021 (10:06:46 CEST)

How to cite: Tao, Y. Exponential Income Distribution and Evolution of Unemployment Compensation in the United Kingdom. Preprints 2021, 2021070350 (doi: 10.20944/preprints202107.0350.v1). Tao, Y. Exponential Income Distribution and Evolution of Unemployment Compensation in the United Kingdom. Preprints 2021, 2021070350 (doi: 10.20944/preprints202107.0350.v1).

Abstract

We show that an exponential income distribution will emerge spontaneously in a peer-to-peer economic network that shares the publicly available technology. Based on this finding, we identify the exponential income distribution as the benchmark structure of the well-functioning market economy. However, a real market economy may deviate from the well-functioning market economy. We show that the deviation is partly reflected as the invalidity of exponential distribution in describing the super-low income class that involves unemployment. In this regard, we find, theoretically, that the lower-bound u of exponential income distribution has a linear relationship with (per capita) unemployment compensation. In this paper, we test this relationship for the United Kingdom from 2001 to 2015. Our empirical investigation confirms that the income structure of low and middle classes (about 90% of populations) in the United Kingdom exactly obeys exponential distribution, in which the lower-bound u is exactly in line with the evolution of unemployment compensation.

Subject Areas

Peer-to-peer economy; Income distribution; Unemployment compensation; Technological change

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