Probability Models of Income Distribution

Probability models of income distribution provide for evaluation of the living standard of population of a country at whole as well as for comparison of the living standard of different social classes or regions in the country. For creation of a probability model it is important both, to find a theoretical distribution function that characterizes empirical frequency distribution and to choose suitable methods to calculate parameters of the model. To construct a suitable parametric model of income distribution one can apply the maximization of coincidence of theoretical and empirical frequencies or quintiles. This paper concentrates on methods of probability modeling and their application to creation of a model of household income distribution.