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Measuring Richness And Poverty: A Micro Data Application To Europe And Germany

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  • Andreas Peichl
  • Thilo Schaefer
  • Christoph Scheicher

Abstract

In this paper, we define a new class of richness measures. In contrast to the often used headcount, these new measures are sensitive to changes in rich individuals' incomes and, therefore, allow for a more sophisticated analysis of richness. We demonstrate the application of these new measures in analyzing the development of poverty and richness over time in Germany. Moreover, we compare Germany to many other European countries and investigate the impact of tax reforms on poverty and richness. Using these examples, we show the importance of taking the intensity of changes into account and not only the number of people beyond a given richness line (headcount). We propose to use the new measures in addition to the headcount index for a more comprehensive analysis of richness. Copyright 2010 The Authors. Review of Income and Wealth 2010 International Association for Research in Income and Wealth.

Suggested Citation

  • Andreas Peichl & Thilo Schaefer & Christoph Scheicher, 2010. "Measuring Richness And Poverty: A Micro Data Application To Europe And Germany," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 56(3), pages 597-619, September.
  • Handle: RePEc:bla:revinw:v:56:y:2010:i:3:p:597-619
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    References listed on IDEAS

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    1. Fabien Dell, 2005. "Top Incomes in Germany and Switzerland Over the Twentieth Century," Journal of the European Economic Association, MIT Press, vol. 3(2-3), pages 412-421, 04/05.
    2. Schaefer, Thilo & Peichl, Andreas, 2006. "Documentation FiFoSiM: integrated tax benefit microsimulation and CGE model," FiFo Discussion Papers - Finanzwissenschaftliche Diskussionsbeiträge 06-10, University of Cologne, FiFo Institute for Public Economics.
    3. Thomas Piketty, 2005. "Top Income Shares in the Long Run: An Overview," Journal of the European Economic Association, MIT Press, pages 382-392.
    4. Atkinson, Tony, et al, 2002. "Microsimulation of Social Policy in the European Union: Case Study of a European Minimum Pension," Economica, London School of Economics and Political Science, vol. 69(274), pages 229-243, May.
    5. Marcelo Medeiros, 2006. "The Rich and the Poor: The Construction of an Affluence Line from the Poverty Line," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, pages 1-18.
    6. Ricardo Varsano & Kevin Kim & Michael Keen, 2006. "The "Flat Tax(es)"; Principles and Evidence," IMF Working Papers 06/218, International Monetary Fund.
    7. Thomas Piketty & Emmanuel Saez, 2006. "The Evolution of Top Incomes: A Historical and International Perspective," American Economic Review, American Economic Association, pages 200-205.
    8. Chakravarty, Satya R., 1983. "A new index of poverty," Mathematical Social Sciences, Elsevier, vol. 6(3), pages 307-313, December.
    9. Anthony B. Atkinson, 2005. "Comparing the Distribution of Top Incomes Across Countries," Journal of the European Economic Association, MIT Press, vol. 3(2-3), pages 393-401, 04/05.
    10. Atkinson, A. B., 1997. "Measurement of Trends in Poverty and the Income Distribution," Cambridge Working Papers in Economics 9712, Faculty of Economics, University of Cambridge.
    11. Schaefer, Thilo & Peichl, Andreas, 2007. "Documentation FiFoSiM: Integrated tax benefit microsimulation," FiFo Discussion Papers - Finanzwissenschaftliche Diskussionsbeiträge 06-10 [rev.], University of Cologne, FiFo Institute for Public Economics.
    12. Thomas Piketty & Emmanuel Saez, 2006. "The Evolution of Top Incomes: A Historical and International Perspective," American Economic Review, American Economic Association, pages 200-205.
    13. Emmanuel Saez & Michael R. Veall, 2005. "The Evolution of High Incomes in Northern America: Lessons from Canadian Evidence," American Economic Review, American Economic Association, pages 831-849.
    14. Emmanuel Saez, 2005. "Top Incomes in the United States and Canada Over the Twentieth Century," Journal of the European Economic Association, MIT Press, vol. 3(2-3), pages 402-411, 04/05.
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    More about this item

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • I32 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Measurement and Analysis of Poverty

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