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Joint Income-Wealth Inequality: Evidence from Lucerne Tax Data

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  • David Gallusser

    (University of Basel)

  • Matthias Krapf

    (University of Basel and CESifo)

Abstract

Using tax data from the Swiss canton of Lucerne, we study how measures of economic inequality change if they account for income and wealth rather than income alone. Joint income-wealth, the sum of labor income and annuitized wealth, serves as a measure of combined inequality of income and wealth. Inequality measured using joint income-wealth is higher than measured using income alone. We refine existing annuitization techniques by introducing heterogeneous returns. The joint distribution of labor income and annuitized wealth displays strong tail dependence at the top and a negative association for negative annuitized wealth. A decomposition shows that the underlying marginal distributions of labor income and annuitized wealth account for most of joint income-wealth inequality, whereas their association matters only in the tails.

Suggested Citation

  • David Gallusser & Matthias Krapf, 2022. "Joint Income-Wealth Inequality: Evidence from Lucerne Tax Data," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 163(1), pages 251-295, August.
  • Handle: RePEc:spr:soinre:v:163:y:2022:i:1:d:10.1007_s11205-022-02887-9
    DOI: 10.1007/s11205-022-02887-9
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    3. Sarah Kuypers & Gerlinde Verbist, 2022. "Over-indebtedness and poverty : Patterns across household types and policy effects," Working Paper Research 420, National Bank of Belgium.

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