  We investigate the shape of the Italian personal income distribution using
microdata from the Survey on Household Income and Wealth, made publicly
available by the Bank of Italy for the years 1977--2002. We find that the upper
tail of the distribution is consistent with a Pareto-power law type
distribution, while the rest follows a two-parameter lognormal distribution.
The results of our analysis show a shift of the distribution and a change of
the indexes specifying it over time. As regards the first issue, we test the
hypothesis that the evolution of both gross domestic product and personal
income is governed by similar mechanisms, pointing to the existence of
correlation between these quantities. The fluctuations of the shape of income
distribution are instead quantified by establishing some links with the
business cycle phases experienced by the Italian economy over the years covered
by our dataset.
