ABSTRACT
The economic literature does not contain much that can be described as a theory of income distribution, in the sense of a theory explaining the distribution of income among individuals and households. Instead, the standard works of each major school of thought usually have a section described as a theory of distribution, explaining how factor prices are determined and how they in turn determine the shares of total output accruing to each of these factors of production. Often these questions are addressed because of the role of factor prices and factor shares in the study of economic growth. The prices and income shares of factors of production are not sufficient by themselves to explain the personal distribution of income; however, as discussed in Chapter seven, they are a necessary ingredient of a complete theory of income distribution. Therefore the analyses of factor prices and factor shares, as considered in the major theories of economics, are briefly reviewed in this chapter.
