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Top incomes and inequality in the UK: reconciling estimates from household survey and tax return data

Author

Listed:
  • Richard V Burkhauser
  • Nicolas Hérault
  • Stephen P Jenkins
  • Roger Wilkins

Abstract

We provide the first systematic comparison of UK inequality estimates derived from tax data (World Wealth and Income Database) and household survey data (the Households Below Average Income [HBAI] subfile of the Family Resources Survey). We document by how much existing survey data underestimate top income shares relative to tax data. Exploiting the flexibility that access to unit-record survey data provides, we then derive new top-income-adjusted data. These data enable us to: better track tax-data-estimated top income shares; change the definitions of income, income-sharing unit, and unit of analysis used and thereby undertake more comparable cross-national comparisons (we provide a UK-US illustration); and examine UK inequality levels and trends using four summary indices. Our estimates reveal a greater rise in the inequality of equivalized gross household income among all persons between the mid-1990s and late 2000s than shown by the corresponding HBAI series, especially between 2004/05 and 2007/08.

Suggested Citation

  • Richard V Burkhauser & Nicolas Hérault & Stephen P Jenkins & Roger Wilkins, 2018. "Top incomes and inequality in the UK: reconciling estimates from household survey and tax return data," Oxford Economic Papers, Oxford University Press, vol. 70(2), pages 301-326.
  • Handle: RePEc:oup:oxecpp:v:70:y:2018:i:2:p:301-326.
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    File URL: http://hdl.handle.net/10.1093/oep/gpx041
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    Citations

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    Cited by:

    1. Advani, Arun & Bangham, George & Leslie, Jack, 2021. "The UK's wealth distribution and characteristics of high-wealth households," CAGE Online Working Paper Series 576, Competitive Advantage in the Global Economy (CAGE).
    2. Richard V. Burkhauser & Nicolas Herault & Stephen P. Jenkins & Roger Wilkins, 2020. "What accounts for the rising share of women in the top 1\%?," Working Papers 544, ECINEQ, Society for the Study of Economic Inequality.
    3. A. B. Atkinson & Stephen P. Jenkins, 2020. "A Different Perspective on the Evolution of UK Income Inequality," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 66(2), pages 253-266, June.
    4. Obolenskaya, Polina & Hills, John, 2019. "Flat-lining or seething beneath the surface?: two decades of changing economic inequality in the UK," LSE Research Online Documents on Economics 101128, London School of Economics and Political Science, LSE Library.
    5. Advani, Arun & Ooms, Tahnee & Summers, Andy, 2021. "Missing incomes in the UK: Evidence and policy implications," CAGE Online Working Paper Series 543, Competitive Advantage in the Global Economy (CAGE).
    6. Obolenskaya, Polina & Hills, John, 2019. "Flat-lining or seething beneath the surface: two decades of changing economic inequality in the UK," LSE Research Online Documents on Economics 100287, London School of Economics and Political Science, LSE Library.
    7. Dominic Webber & Richard P. Tonkin & Martin Shine, 2020. "Using Tax Data to Better Capture Top Incomes in Official UK Income Inequality Statistics," NBER Chapters, in: Measuring Distribution and Mobility of Income and Wealth, National Bureau of Economic Research, Inc.
    8. Roantree, Barra & Maître, Bertrand & McTague, Alyvia & Privalko, Ivan, 2021. "Poverty, income inequality and living standards in Ireland," Research Series, Economic and Social Research Institute (ESRI), number BKMNEXT412.
    9. Richard V. Burkhauser & Markus H. Hahn & Roger Wilkins, 2018. "Transitioning from an Historical to a Contemporary Use of Tax Record Data for Measuring Top Incomes in Australia," Economic Papers, The Economic Society of Australia, vol. 37(2), pages 113-145, June.
    10. 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.
    11. Advani, Arun & Ooms, Tahnee & Summers, Andy, 2021. "Missing incomes in the UK: Evidence and policy implications," CAGE Online Working Paper Series 543, Competitive Advantage in the Global Economy (CAGE).

    More about this item

    JEL classification:

    • C81 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs - - - Methodology for Collecting, Estimating, and Organizing Microeconomic Data; Data Access
    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution

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