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The impact of housing non-cash income on the household income distribution in Austria

Author

Listed:
  • Pirmin Fessler

    (Oesterreichische Nationalbank, Austria)

  • Miriam Rehm

    (Chamber of Labour Vienna, Austria)

  • Lukas Tockner

    (Chamber of Labour Vienna, Austria)

Abstract

We estimate non-cash income from owner-occupied housing, subsidised rental housing, and free use of the main residence, and evaluate their impact on the household income distribution and selected inequality measures. We use a novel data set that provides inter-subjective information on housing quality, thus eschewing selection problems. We confirm the standard finding in the literature that imputed rents accruing to home owners have an equalising effect on the distribution of income and find similar evidence for non-cash income from subsidised rents. Whereas imputed rents equalise the upper part of the income distribution, subsidised housing has an equalising effect on the lower part of the income distribution. Overall, the effect of non-cash income from owner-occupied housing clearly dominates the distributional effects, which translates into a combined effect of around 13% higher equivalised household income for the bottom half and around 8% for the upper half of the distribution. Our data provide us with two rare opportunities: to distinguish between council and cooperative housing, and to apply all three approaches used to calculate imputed rents for owner-occupiers: the capital-, the self-assessment and the equivalent rent approach. We find that using the equivalent rent approach leads to the strongest reduction in income inequality. This suggests that, while the inequality reducing effects of imputed rents are robust, they might be overestimated in the literature.

Suggested Citation

  • Pirmin Fessler & Miriam Rehm & Lukas Tockner, 2016. "The impact of housing non-cash income on the household income distribution in Austria," Urban Studies, Urban Studies Journal Limited, vol. 53(13), pages 2849-2866, October.
    • Handle: RePEc:sae:urbstu:v:53:y:2016:i:13:p:2849-2866
    DOI: 10.1177/0042098015596116
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    References listed on IDEAS

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    2. Carlos Felipe Balcázar & Lidia Ceriani & Sergio Olivieri & Marco Ranzani, 2017. "Rent‐Imputation for Welfare Measurement: A Review of Methodologies and Empirical Findings," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 63(4), pages 881-898, December.
    3. Ulrich B. Morawetz & H. Allen Klaiber, 2022. "Does housing policy impact income sorting near urban amenities? Evidence from Vienna, Austria," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 69(2), pages 411-454, October.
    4. Kilgarriff, Paul & Charlton, Martin & Foley, Ronan & O'Donoghue, Cathal, 2019. "The impact of housing consumption value on the spatial distribution of welfare," Journal of Housing Economics, Elsevier, vol. 43(C), pages 118-130.
    5. Mattias Muckenhuber & Miriam Rehm & Matthias Schnetzer, 2022. "A Tale of Integration? The Migrant Wealth Gap in Austria," European Journal of Population, Springer;European Association for Population Studies, vol. 38(2), pages 163-190, May.
    6. Stefan Kranzinger, 2020. "The decomposition of income inequality in the EU-28," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 47(3), pages 643-668, August.
    7. Lidia Ceriani & Sergio Olivieri & Marco Ranzani, 2023. "Housing, imputed rent, and household welfare," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 21(1), pages 131-168, March.
    8. Alexeev, Sergey, 2020. "The role of imputed rents in intergenerational income mobility in three countries," Journal of Housing Economics, Elsevier, vol. 49(C).
    9. Stefan Ederer & Stefan Humer & Stefan Jestl & Emanuel List, 2020. "Distributional National Accounts (DINA) with Household Survey Data: Methodology and Results for European Countries," wiiw Working Papers 180, The Vienna Institute for International Economic Studies, wiiw.
    10. Emanuel List, 2023. "Housing and Income Inequality in Europe: Distributional Effects of Non‐Cash Income From Imputed Rents," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 69(2), pages 504-532, June.
    11. Guillaume BERARD & Alain Trannoy, 2023. "Housing Policy Impacts on Poverty and Inequality in Europe," Working Papers 640, ECINEQ, Society for the Study of Economic Inequality.
    12. Miriam Rehm & Alyssa Schneebaum & Barbara Schuster, 2022. "Intra-Couple Wealth Inequality: What’s Socio-Demographics Got to Do with it?," European Journal of Population, Springer;European Association for Population Studies, vol. 38(4), pages 681-720, October.
    13. Stefan Ederer & Predrag Ćetković & Stefan Humer & Stefan Jestl & Emanuel List, 2022. "Distributional National Accounts (DINA) with Household Survey Data: Methodology and Results for European Countries," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 68(3), pages 667-688, September.

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