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Is Inequality Underestimated in Egypt? Evidence from House Prices

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  • Roy van der Weide
  • Christoph Lakner
  • Elena Ianchovichina

Abstract

Household income surveys often fail to capture top incomes, which leads to an underestimation of income inequality. A popular solution is to combine the household survey with data from income tax records, which has been found to result in significant upward corrections of inequality estimates. Unfortunately, tax records are unavailable in many countries, including most of the developing world. In the absence of data from tax records, this study explores the feasibility of using data on house prices to estimate the top tail of the income distribution. In an application to Egypt, where estimates of inequality based on household surveys alone are low by international standards, the study finds strong evidence that inequality is indeed being underestimated by a considerable margin. The Gini index of household per capita income for urban Egypt is found to increase from 39 to 52 after correcting for the missing top tail.

Suggested Citation

  • Roy van der Weide & Christoph Lakner & Elena Ianchovichina, 2018. "Is Inequality Underestimated in Egypt? Evidence from House Prices," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 64(s1), pages 55-79, October.
  • Handle: RePEc:bla:revinw:v:64:y:2018:i:s1:p:s55-s79
    DOI: 10.1111/roiw.12338
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    Cited by:

    1. Channing Arndt & Kristi Mahrt, 2017. "Is inequality underestimated in Mozambique? Accounting for underreported consumption," WIDER Working Paper Series 153, World Institute for Development Economic Research (UNU-WIDER).
    2. Branko Milanovic, 2018. "Towards an explanation of inequality in premodern societies: the role of colonies, urbanization, and high population density," Economic History Review, Economic History Society, vol. 71(4), pages 1029-1047, November.
    3. Ingrid Woolard & Janina Hundenborn & Jon Jellema, 2018. "The effect of top incomes on inequality in South Africa," WIDER Working Paper Series 90, World Institute for Development Economic Research (UNU-WIDER).
    4. Facundo Alvaredo & Lydia Assouad & Thomas Piketty, 2019. "Measuring lnequality in the Middle East 1990–2016: The World’s Most Unequal Region?," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 65(4), pages 685-711, December.
    5. Peter Lanjouw & Hai-Anh Dang, 2018. "Inequality trends and dynamics in India: The bird’s-eye and the granular perspectives," WIDER Working Paper Series 189, World Institute for Development Economic Research (UNU-WIDER).
    6. Elena Ianchovichina & Lili Mottaghi & Shantayanan Devarajan, "undated". "Middle East and North Africa Economic Monitor, October 2015," World Bank Other Operational Studies 22711, The World Bank.
    7. Krafft, Caroline & Davis, Elizabeth E., 2019. "The Arab Inequality Puzzle: The Role of Income Sources in Egypt and Tunisia," GLO Discussion Paper Series 405, Global Labor Organization (GLO).
    8. Gerton Rongen, 2018. "A new inequality estimate for urban India?: Using house prices to estimate inequality in Mumbai," WIDER Working Paper Series 181, World Institute for Development Economic Research (UNU-WIDER).
    9. Janina Hundenborn & Ingrid Woolard & Jon Jellema, 2019. "The effect of top incomes on inequality in South Africa," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 26(5), pages 1018-1047, October.

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