Tulonjakofraktiot

Tulonjakofraktiot, or income-distribution fractions, is a conceptual tool in economics used to describe how total national income is divided among predefined groups within an economy. The term combines Finnish roots for income (tulon), distribution (jaon), and fractions (fraktiot). It serves as a compact descriptor for the vector of income shares assigned to each group.

Definition: For an economy divided into n groups, the tulonjakofraktiot form a vector f = (f1, ..., fn), where fi ≥ 0 for all i and the sum of fi equals 1. Each fi is the share of total income received by group i. Groups can be households by quintile, regions, or sectors.

Applications: They are used to analyze income inequality, assess redistribution policies, and provide inputs to inequality measures. They underpin the construction of the Lorenz curve and can be summarized by indices such as the Theil index, the Palma ratio, and related metrics.

Example: consider three groups with f = (0.5, 0.3, 0.2) and population shares p = (0.2, 0.5, 0.3). The Theil index is T = sum fi ln(fi/p_i) ≈ 0.5 ln(2.5) + 0.3 ln(0.6) + 0.2 ln(0.6667) ≈ 0.22.

Limitations: The interpretation depends on how groups are defined and data quality. Tulonjakofraktiot capture only cross-sectional shares and do not reflect within-group inequality or non-income sources.

See also: Lorenz curve, Gini coefficient, Theil index, Palma ratio.