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Distributional Effects of Imputed Rents in Five European Countries

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  • Frick, Joachim R.
  • Grabka, Markus M.
  • Smeeding, Timothy M.
  • Tsakloglou, Panos

Abstract

Most empirical distributional studies of well-being in developed countries rely on distributions of disposable income. From a theoretical point of view this practice is contentious since a household’s command over resources is determined not only by its spending power over commodities it can buy in the market but also on resources available to the household members through non-market mechanisms such as the in-kind provisions of the welfare state and the value of private non-cash incomes. In developed market economies the most important private non-cash income component is imputed rent from owner-occupied or subsidized accommodation. Employing a wider definition of imputed rent that also allows the analyst to capture income advantages among tenants living in rent-subsidized accommodations of various sorts (including rent-free or reduced-rent households), the present paper examines the differential effects of including imputed rents in the concept of resources in five European countries (Belgium, Germany, Greece, Italy and the UK). The results suggest that in almost all cases, the inclusion of imputed rents in the concept of resources leads to a decline in measured levels of inequality and poverty. The main beneficiaries are outright homeowners and households living in rent-free (or heavily subsidized) accommodation—most often older persons. The inclusion of imputed rents in the concept of resources does not lead to substantial changes in the ranking of the countries according to their level of inequality, despite widespread differences in the rates of home ownership and subsidization across the countries studied here.

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  • Frick, Joachim R. & Grabka, Markus M. & Smeeding, Timothy M. & Tsakloglou, Panos, 2010. "Distributional Effects of Imputed Rents in Five European Countries," EconStor Open Access Articles, ZBW - German National Library of Economics, pages 167-179.
  • Handle: RePEc:zbw:espost:67388
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    Cited by:

    1. Paulus, Alari & Sutherland, Holly & Tsakloglou, Panos, 2009. "The distributional impact of in kind public benefits in European countries," EUROMOD Working Papers EM10/09, EUROMOD at the Institute for Social and Economic Research.
    2. Garner, Thesia I. & Verbrugge, Randal, 2009. "Reconciling user costs and rental equivalence: Evidence from the US consumer expenditure survey," Journal of Housing Economics, Elsevier, vol. 18(3), pages 172-192, September.
    3. Markus M. Grabka & Gerlinde Verbist, 2015. "Non-cash benefits from social housing in Europe: a comparative perspective," ImPRovE Working Papers 15/07, Herman Deleeck Centre for Social Policy, University of Antwerp.
    4. Christos Koutsampelas, 2012. "Immigration and Poverty: Findings from Cyprus," University of Cyprus Working Papers in Economics 13-2012, University of Cyprus Department of Economics.
    5. Frick, Joachim R. & Grabka, Markus M., 2009. "Accounting for Imputed and Capital Income Flows in Income Inequality Analyses," IZA Discussion Papers 4634, Institute for the Study of Labor (IZA).
    6. Gerlinde Verbist & Michael Föster & Vaalavou, M., 2013. "GINI DP 74: The Impact of Publicly Provided Services on the Distribution of Resources: Review of New Results and Methods," GINI Discussion Papers 74, AIAS, Amsterdam Institute for Advanced Labour Studies.
    7. Christos Koutsampelas & Panos Tsakloglou, 2012. "The distribution of full income in Greece," University of Cyprus Working Papers in Economics 03-2012, University of Cyprus Department of Economics.
    8. Tess Penne & Irene Cussó Parcerisas & Lauri Mäkinen & Bérénice Storms & Tim Goedemé, 2016. "Can reference budgets be used as a poverty line?," ImPRovE Working Papers 16/05, Herman Deleeck Centre for Social Policy, University of Antwerp.
    9. Garner, Thesia I. & Short, Kathleen, 2009. "Accounting for owner-occupied dwelling services: Aggregates and distributions," Journal of Housing Economics, Elsevier, vol. 18(3), pages 233-248, September.
    10. Tony Addison & Yukka Pirttilä & Finn Tarp & Carlos Felipe Balcázar & Lidia Ceriani & Sergio Olivieri & Marco Ranzani, 2017. "Rent-Imputation for Welfare Measurement: A Review of Methodologies and Empirical Findings," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 63(4), pages 881-898, December.
    11. Christos Koutsampelas, 2015. "Blind spots of traditional poverty measurement: the case of migrants," Migration Letters, Transnational Press London, UK, vol. 12(2), pages 13-27, May.
    12. Christos Koutsampelas & Panos Tsakloglou, 2013. "The distribution of full income in Greece," International Journal of Social Economics, Emerald Group Publishing, vol. 40(4), pages 311-330, March.
    13. Panos Tsakloglou & Francesco Figari & Alari Paulus & Holly Sutherland & Gerlinde Verbist & Francesca Zantomio, 2012. "Taxing home ownership: distributional effects of including net imputed rent in taxable income," EcoMod2012 4323, EcoMod.
    14. Mullan, Killian & Sutherland, Holly & Zantomio, Francesca, 2009. "Accounting for housing in poverty analysis," ISER Working Paper Series 2009-33, Institute for Social and Economic Research.
    15. Fessler, Pirmin & Rehm, Miriam & Tockner, Lukas, 2014. "The impact of housing non-cash income on the unconditional distribution of household income in Austria," Working Paper Series 1718, European Central Bank.
    16. Andreas Fagereng & Elin Halvorsen, 2015. "Imputing consumption from Norwegian income and wealth registry data," Discussion Papers 831, Statistics Norway, Research Department.
    17. Paola Annoni & Dorota Weziak-Bialowolska, 2016. "A Measure to Target Antipoverty Policies in the European Union Regions," Applied Research in Quality of Life, Springer;International Society for Quality-of-Life Studies, vol. 11(1), pages 181-207, March.
    18. Virginia Maestri, 2015. "A Measure of Income Poverty Including Housing: Benefits and Limitations for Policy Making," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 121(3), pages 675-696, April.
    19. Yilmazer Tansel & Adaman Fikret & Kaytaz Mehmet, 2012. "The Impact of Financial Development on Homeownership and Housing in Emerging Economies: Evidence from Turkey," Review of Middle East Economics and Finance, De Gruyter, vol. 8(2), pages 1-29, October.
    20. Carole Bonnet & Olivier Bontout & Anne-Juliette Lecourt, 2014. "Une décomposition des différences de niveaux de vie des actifs et des retraités en Europe," Économie et Statistique, Programme National Persée, vol. 469(1), pages 121-146.

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