Scalability in a Two-Class Interoccupational Earnings Distribution Model

Abstract: This study evaluates a two-class earnings distribution model that combines a power law distribution for higher-earning individuals and a lognormal distribution for the rest of the sample, while considering occupation scalability. We analyze data from the Brazilian labor market and model entire distributions, not just the tails. Our findings suggest that non-scalable occupations may be more egalitarian than scalable ones in the upper portion of the data from the optimal cutoff point. Keywords: Earnings Distribution, Income Distribution, Scalable Occupations, Two-Class Distribution Model, Pareto Distribution, Power Laws, Lognormal Distribution JEL Classification Number: D30, D31, J44