When the focus is on how the tax system changes the distribution of income among capitalists, laborers, and landlords. This is referred to as the functional distribution of income.
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Personal income distribution and functional income distribution :)
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The size distribution of income is one of two ways to measure inequality in income; other is functional distribution of income.Under this method, income of individuals and households is collected and arranged in ascending order. This data is, then, divided among groups. Most common method is to divide data into "quintiles" (i.e in five groups, each representing 20% of data) and "deciles" (i.e. in ten groups, each representing 10% of data) in percentage form. Then, it is determined that what percentage of total income is received by each income group.We can also calculate Kuznets ratio under this method which is the ratio of income of top 20% to income of bottom 40%.
The distribution of income in the last two decades has become less equal.
Unequal Distribution of invcome results in the rise of POVERTY.