IDEAS home Printed from https://ideas.repec.org/a/bla/revinw/v69y2023i3p725-754.html
   My bibliography  Save this article

Top Income Adjustments and Inequality: An Investigation of the EU‐SILC

Author

Listed:
  • Rafael Carranza
  • Marc Morgan
  • Brian Nolan

Abstract

This paper provides a novel assessment of how the World Inequality Database (WID) top income adjustment applied by Blanchet, Chancel, and Gethin (2021) to European Union Statistics on Income and Living Conditions (EU‐SILC) data for 26 countries over 2003–2017 for Distributional National Accounts purposes affects inequality in equivalized gross and disposable household income. On average, the Gini is increased by around 2.4 points for both gross and disposable income, with notable differences across countries but limited impact on trends. EU‐SILC countries that rely on administrative register data see relatively small effects on inequality. Comparing with two other recent studies, differences in impacts on measured inequality depend less on the adjustment method and more on whether external data sources are used.

Suggested Citation

  • Rafael Carranza & Marc Morgan & Brian Nolan, 2023. "Top Income Adjustments and Inequality: An Investigation of the EU‐SILC," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 69(3), pages 725-754, September.
  • Handle: RePEc:bla:revinw:v:69:y:2023:i:3:p:725-754
    DOI: 10.1111/roiw.12591
    as

    Download full text from publisher

    File URL: https://doi.org/10.1111/roiw.12591
    Download Restriction: no

    File URL: https://libkey.io/10.1111/roiw.12591?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Thomas Piketty & Li Yang & Gabriel Zucman, 2019. "Capital Accumulation, Private Property, and Rising Inequality in China, 1978–2015," American Economic Review, American Economic Association, vol. 109(7), pages 2469-2496, July.
    2. Thomas Blanchet & Lucas Chancel & Amory Gethin, 2022. "Why Is Europe More Equal than the United States?," American Economic Journal: Applied Economics, American Economic Association, vol. 14(4), pages 480-518, October.
    3. Richard Burkhauser & Shuaizhang Feng & Stephen Jenkins & Jeff Larrimore, 2009. "Recent Trends in Top Income Shares in the USA: Reconciling Estimates from March CPS and IRS Tax Return Data," Working Papers 09-26, Center for Economic Studies, U.S. Census Bureau.
    4. Angus Deaton, 2005. "Measuring Poverty in a Growing World (or Measuring Growth in a Poor World)," The Review of Economics and Statistics, MIT Press, vol. 87(1), pages 1-19, February.
    5. Ercio Muñoz & Salvatore Morelli, 2021. "kmr: A command to correct survey weights for unit nonresponse using groups’ response rates," Stata Journal, StataCorp LP, vol. 21(1), pages 206-219, March.
    6. Anthony B. Atkinson & Thomas Piketty & Emmanuel Saez, 2011. "Top Incomes in the Long Run of History," Journal of Economic Literature, American Economic Association, vol. 49(1), pages 3-71, March.
    7. Cowell, Frank & Mercader-Prats, Magda, 1999. "Equivalence scales and inequality," LSE Research Online Documents on Economics 2190, London School of Economics and Political Science, LSE Library.
    8. Facundo Alvaredo & Lucas Chancel & Thomas Piketty & Emmanuel Saez & Gabriel Zucman, 2017. "Global Inequality Dynamics: New Findings from WID.world," American Economic Review, American Economic Association, vol. 107(5), pages 404-409, May.
    9. Garbinti, Bertrand & Goupille-Lebret, Jonathan & Piketty, Thomas, 2018. "Income inequality in France, 1900–2014: Evidence from Distributional National Accounts (DINA)," Journal of Public Economics, Elsevier, vol. 162(C), pages 63-77.
    10. Stephen P. Jenkins, 2017. "Pareto Models, Top Incomes and Recent Trends in UK Income Inequality," Economica, London School of Economics and Political Science, vol. 84(334), pages 261-289, April.
    11. Angus Deaton, 2005. "ERRATUM: Measuring Poverty in a Growing World (or Measuring Growth in a Poor World)," The Review of Economics and Statistics, MIT Press, vol. 87(2), pages 395-395, May.
    12. Thomas Piketty & Emmanuel Saez & Gabriel Zucman, 2018. "Distributional National Accounts: Methods and Estimates for the United States," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 133(2), pages 553-609.
    13. Vladimir Hlasny, 2021. "Parametric representation of the top of income distributions: Options, historical evidence, and model selection," Journal of Economic Surveys, Wiley Blackwell, vol. 35(4), pages 1217-1256, September.
    14. Thomas Piketty & Emmanuel Saez, 2003. "Income Inequality in the United States, 1913–1998," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 118(1), pages 1-41.
    15. Goedemé, Tim & Zardo Trindade, Lorena, 2020. "MetaSILC 2015: A Report on the Contents and Comparability of the EU-SILC Income Variables," INET Oxford Working Papers 2020-01, Institute for New Economic Thinking at the Oxford Martin School, University of Oxford.
    16. Mistiaen, Johan A. & Ravallion, Martin, 2003. "Survey compliance and the distribution of income," Policy Research Working Paper Series 2956, The World Bank.
    17. Vladimir Hlasny, 2020. "Nonresponse Bias in Inequality Measurement: Cross‐Country Analysis Using Luxembourg Income Study Surveys," Social Science Quarterly, Southwestern Social Science Association, vol. 101(2), pages 712-731, March.
    18. Anthony Atkinson & Thomas Piketty, 2010. "Top Incomes : A Global Perspective," PSE-Ecole d'économie de Paris (Postprint) halshs-00754875, HAL.
    19. Feldstein, Martin S, 1969. "The Effects on Taxation on Risk Taking," Journal of Political Economy, University of Chicago Press, vol. 77(5), pages 755-764, Sept./Oct.
    20. Vladimir Hlasny & Paolo Verme, 2018. "Top Incomes and Inequality Measurement: A Comparative Analysis of Correction Methods Using the EU SILC Data," Econometrics, MDPI, vol. 6(2), pages 1-21, June.
    21. Thomas Blanchet & Ignacio Flores & Marc Morgan, 2022. "The weight of the rich: improving surveys using tax data," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 20(1), pages 119-150, March.
    22. Anthony Atkinson & Thomas Piketty, 2007. "Top incomes over the twentieth century: A contrast between continental european and english-speaking countries," Post-Print halshs-00754859, HAL.
    23. Charlotte Bartels & Maria Metzing, 2019. "An integrated approach for a top-corrected income distribution," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 17(2), pages 125-143, June.
    24. Atkinson, A. B. & Piketty, Thomas (ed.), 2010. "Top Incomes: A Global Perspective," OUP Catalogue, Oxford University Press, number 9780199286898.
    25. Korinek, Anton & Mistiaen, Johan A. & Ravallion, Martin, 2007. "An econometric method of correcting for unit nonresponse bias in surveys," Journal of Econometrics, Elsevier, vol. 136(1), pages 213-235, January.
    26. Richard V. Burkhauser & Shuaizhang Feng & Stephen P. Jenkins & Jeff Larrimore, 2012. "Recent Trends in Top Income Shares in the United States: Reconciling Estimates from March CPS and IRS Tax Return Data," The Review of Economics and Statistics, MIT Press, vol. 94(2), pages 371-388, May.
    27. Alvaredo, Facundo, 2011. "A note on the relationship between top income shares and the Gini coefficient," Economics Letters, Elsevier, vol. 110(3), pages 274-277, March.
    28. Anton Korinek & Johan Mistiaen & Martin Ravallion, 2006. "Survey nonresponse and the distribution of income," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 4(1), pages 33-55, April.
    29. Thomas Piketty, 2003. "Income Inequality in France, 1901-1998," Journal of Political Economy, University of Chicago Press, vol. 111(5), pages 1004-1042, October.
    30. Atkinson, A. B. & Piketty, Thomas (ed.), 2007. "Top Incomes Over the Twentieth Century: A Contrast Between Continental European and English-Speaking Countries," OUP Catalogue, Oxford University Press, number 9780199286881.
    31. Callan, Tim & Doorley, Karina & McTague, Alyvia, 2020. "Top Incomes in Ireland: Reconciling Evidence from Tax Records and Household Survey Data," IZA Discussion Papers 13585, Institute of Labor Economics (IZA).
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Stephen P. Jenkins, 2022. "Top-income adjustments and official statistics on income distribution: the case of the UK," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 20(1), pages 151-168, March.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Nora Lustig, 2019. "The “Missing Rich” in Household Surveys: Causes and Correction Approaches," Commitment to Equity (CEQ) Working Paper Series 75, Tulane University, Department of Economics.
    2. Bartels, Charlotte & Waldenström, Daniel, 2021. "Inequality and top incomes," GLO Discussion Paper Series 959, Global Labor Organization (GLO).
    3. Diego Winkelried & Bruno Escobar, 2022. "Declining inequality in Latin America? Robustness checks for Peru," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 20(1), pages 223-243, March.
    4. Nora Lustig, 2020. "The ``missing rich'' in household surveys: causes and correction approaches," Working Papers 520, ECINEQ, Society for the Study of Economic Inequality.
    5. Frank Cowell & Emmanuel Flachaire, 2021. "Inequality Measurement: Methods and Data," Post-Print hal-03589066, HAL.
    6. Nishant Yonzan & Branko Milanovic & Salvatore Morelli & Janet Gornick, 2022. "Drawing a Line: Comparing the Estimation of Top Incomes between Tax Data and Household Survey Data," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 20(1), pages 67-95, March.
    7. Mathias Silva, 2023. "Parametric models of income distributions integrating misreporting and non-response mechanisms," AMSE Working Papers 2311, Aix-Marseille School of Economics, France.
    8. Vladimir Hlasny & Paolo Verme, 2022. "The Impact of Top Incomes Biases on the Measurement of Inequality in the United States," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 84(4), pages 749-788, August.
    9. Metzing, Maria & Bartels, Charlotte, 2016. "An integrated approach for top-corrected Ginis," VfS Annual Conference 2016 (Augsburg): Demographic Change 145818, Verein für Socialpolitik / German Economic Association.
    10. Nora Lustig, 2018. "Measuring the Distribution of Household Income, Consumption and Wealth: State of Play and Measurement Challenges," Working Papers 1801, Tulane University, Department of Economics.
    11. Thomas Blanchet & Ignacio Flores & Marc Morgan, 2022. "The weight of the rich: improving surveys using tax data," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 20(1), pages 119-150, March.
    12. B. Milanovic, 2014. "The Return of “Patrimonial Capitalism”: A Reviewof Thomas Piketty’s Capital in the Twenty-First Century," Voprosy Ekonomiki, NP Voprosy Ekonomiki, issue 9.
    13. Roman Bobilev & Anne Boschini & Jesper Roine, 2020. "Women in the Top of the Income Distribution: What Can We Learn From LIS-Data?," Italian Economic Journal: A Continuation of Rivista Italiana degli Economisti and Giornale degli Economisti, Springer;Società Italiana degli Economisti (Italian Economic Association), vol. 6(1), pages 63-107, March.
    14. François Bourguignon, 2018. "Simple adjustments of observed distributions for missing income and missing people," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 16(2), pages 171-188, June.
    15. Pawel Bukowski & Filip Novokmet, 2019. "Between Communism and Capitalism: Long-Term Inequality in Poland, 1892- 2015," World Inequality Lab Working Papers hal-02876995, HAL.
    16. Christoph Lakner & Branko Milanovic, 2016. "Global Income Distribution: From the Fall of the Berlin Wall to the Great Recession," The World Bank Economic Review, World Bank, vol. 30(2), pages 203-232.
    17. Jordá, Vanesa & Niño-Zarazúa, Miguel, 2019. "Global inequality: How large is the effect of top incomes?," World Development, Elsevier, vol. 123(C), pages 1-1.
    18. Facundo Alvaredo & Leonardo Gasparini, 2013. "Recent Trends in Inequality and Poverty in Developing Countries," CEDLAS, Working Papers 0151, CEDLAS, Universidad Nacional de La Plata.
    19. Xavier Jara & Nicolás Oliva, 2018. "Top income adjustments and tax reforms in Ecuador," WIDER Working Paper Series wp-2018-165, World Institute for Development Economic Research (UNU-WIDER).
    20. Martin Ravallion, 2022. "Missing Top Income Recipients," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 20(1), pages 205-222, March.

    More about this item

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • N30 - Economic History - - Labor and Consumers, Demography, Education, Health, Welfare, Income, Wealth, Religion, and Philanthropy - - - General, International, or Comparative

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bla:revinw:v:69:y:2023:i:3:p:725-754. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: https://edirc.repec.org/data/iariwea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.