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Distributional Effects of Imputed Rents in Five European Countries

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Author Info

  • Frick, Joachim R.
  • Grabka, Markus M.
  • Smeeding, Timothy M.
  • Tsakloglou, Panos

Abstract

Most empirical distributional studies of well-being in developed countries rely on distributions of disposable income. From a theoretical point of view this practice is contentious since a household’s command over resources is determined not only by its spending power over commodities it can buy in the market but also on resources available to the household members through non-market mechanisms such as the in-kind provisions of the welfare state and the value of private non-cash incomes. In developed market economies the most important private non-cash income component is imputed rent from owner-occupied or subsidized accommodation. Employing a wider definition of imputed rent that also allows the analyst to capture income advantages among tenants living in rent-subsidized accommodations of various sorts (including rent-free or reduced-rent households), the present paper examines the differential effects of including imputed rents in the concept of resources in five European countries (Belgium, Germany, Greece, Italy and the UK). The results suggest that in almost all cases, the inclusion of imputed rents in the concept of resources leads to a decline in measured levels of inequality and poverty. The main beneficiaries are outright homeowners and households living in rent-free (or heavily subsidized) accommodation—most often older persons. The inclusion of imputed rents in the concept of resources does not lead to substantial changes in the ranking of the countries according to their level of inequality, despite widespread differences in the rates of home ownership and subsidization across the countries studied here. --

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Bibliographic Info

Article provided by ZBW - German National Library of Economics in its journal EconStor Open Access Articles.

Volume (Year): (2010-09)
Issue (Month): ()
Pages: 167-179

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Handle: RePEc:zbw:espost:67388

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Keywords: Home ownership; Income in-kind; Imputed rent; Income distribution;

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References

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Citations

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Cited by:
  1. Paulus, Alari & Sutherland, Holly & Tsakloglou, Panos, 2009. "The distributional impact of in kind public benefits in European countries," EUROMOD Working Papers EM10/09, EUROMOD at the Institute for Social and Economic Research.
  2. Koutsampelas, Christos & Tsakloglou, Panos, 2012. "The Distribution of Full Income in Greece," IZA Discussion Papers 6396, Institute for the Study of Labor (IZA).
  3. Christos Koutsampelas, 2012. "Immigration and Poverty: Findings from Cyprus," University of Cyprus Working Papers in Economics, University of Cyprus Department of Economics 13-2012, University of Cyprus Department of Economics.
  4. Garner, Thesia I. & Verbrugge, Randal, 2009. "Reconciling user costs and rental equivalence: Evidence from the US consumer expenditure survey," Journal of Housing Economics, Elsevier, Elsevier, vol. 18(3), pages 172-192, September.
  5. Joachim R. Frick & Markus M. Grabka, 2009. "Accounting for Imputed and Capital Income Flows in Income Inequality Analyses," SOEPpapers on Multidisciplinary Panel Data Research 254, DIW Berlin, The German Socio-Economic Panel (SOEP).
  6. Figari, Francesco & Paulus, Alari & Sutherland, Holly & Tsakloglou, Panos & Verbist, Gerlinde & Zantomio, Francesca, 2012. "Taxing Home Ownership: Distributional Effects of Including Net Imputed Rent in Taxable Income," IZA Discussion Papers 6493, Institute for the Study of Labor (IZA).
  7. Gerlinde Verbist & Michael Föster & Vaalavou, M., 2013. "GINI DP 74: The Impact of Publicly Provided Services on the Distribution of Resources: Review of New Results and Methods," GINI Discussion Papers, AIAS, Amsterdam Institute for Advanced Labour Studies 74, AIAS, Amsterdam Institute for Advanced Labour Studies.
  8. Panos Tsakloglou & Francesco Figari & Alari Paulus & Holly Sutherland & Gerlinde Verbist & Francesca Zantomio, 2014. "Taxing home ownership: distributional effects of including net imputed rent in taxable income," EcoMod2014 7474, EcoMod.
  9. Garner, Thesia I. & Short, Kathleen, 2009. "Accounting for owner-occupied dwelling services: Aggregates and distributions," Journal of Housing Economics, Elsevier, Elsevier, vol. 18(3), pages 233-248, September.
  10. repec:ese:iserwp:2009-33 is not listed on IDEAS
  11. Panos Tsakloglou & Francesco Figari & Alari Paulus & Holly Sutherland & Gerlinde Verbist & Francesca Zantomio, 2012. "Taxing home ownership: distributional effects of including net imputed rent in taxable income," EcoMod2012 4323, EcoMod.

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