What is the difference between functional income distribution and personal income distribution?



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pohnpei397's profile pic

Posted on (Answer #1)

Both of these terms refer to the ways in which income is divided up within an economy.  However, functional income distribution refers to the division between groups of people while personal income distribution refers to the division among individuals.

Functional income distribution measures how much of the income in society goes to the people who own the various kinds of resources.  We know that there are three kinds of resources: land, labor and capital.  Functional income distribution tells us how much of the income in an economy goes to the groups of people who own each of these.  By contrast, personal income distribution simply tells us how much money goes to various individuals, regardless of which of these groups they belong to.

economicrimpa's profile pic

Posted on (Answer #2)

personal distribution of national incom means the distribution of national income among various individual in a society. It shows how inequality of income emerge in the country.

on the other hand the theory of functional distributio studies how thw various factor of prodution are rewarded for their service . It studies how price og factors such as rent of land, wages of labour, inerest on capital and profit of entreprenuer are determined. The theory of distribution is concerned with functional distribution of income which is also called theory of factor pricing.

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