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Deriving Long-Run Inequality Series from Tax Data

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  • Andrew Leigh

Abstract

Prior to the last three decades, regular surveys on household income were rare or non-existent in many developed countries, making it difficult for economists to develop long-run series on income distribution. Using taxation statistics, which tend to be available over a longer time span, I propose a method for imputing the incomes of non-taxpayers, and deriving the underlying distribution of income. Because taxation statistics are typically disaggregated by gender, it is possible to derive separate income distribution series for men and women in countries where individuals file separately. I show that over the past four decades, the distribution of adult male incomes is a good proxy for the distribution of family incomes. Applying this method to Australia, I develop a new annual series for inequality from 1942-2000. Inequality fell in the 1950s and the 1970s, and rose during the 1980s and 1990s – a pattern similar to the United Kingdom.

Suggested Citation

  • Andrew Leigh, 2004. "Deriving Long-Run Inequality Series from Tax Data," CEPR Discussion Papers 476, Centre for Economic Policy Research, Research School of Economics, Australian National University.
  • Handle: RePEc:auu:dpaper:476
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    File URL: https://www.cbe.anu.edu.au/researchpapers/cepr/DP476.pdf
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    Cited by:

    1. Andrew Leigh, 2005. "Economic Voting And Electoral Behavior: How Do Individual, Local, And National Factors Affect The Partisan Choice?," Economics and Politics, Wiley Blackwell, pages 265-296.
    2. Paul Frijters & Robert Gregory, 2006. "From Golden Age to Golden Age: Australia's 'Great Leap Forward'?," The Economic Record, The Economic Society of Australia, vol. 82(257), pages 207-224, June.
    3. Creedy, John & Gemmell, Norman & Nguyen, Loc, 2017. "Income inequality in New Zealand, 1935 – 2014," Working Paper Series 6490, Victoria University of Wellington, Chair in Public Finance.
    4. Peter Siminski, 2013. "Employment Effects of Army Service and Veterans' Compensation: Evidence from the Australian Vietnam-Era Conscription Lotteries," The Review of Economics and Statistics, MIT Press, vol. 95(1), pages 87-97, March.
    5. Ross Guest & Robyn Swift, 2008. "Fertility, income inequality, and labour productivity," Oxford Economic Papers, Oxford University Press, vol. 60(4), pages 597-618, October.
    6. Noel Gaston, 2008. "Understanding Australian Income Inequality: The Proper Role played by Globalisation, De-unionisation and the Terms of Trade," Agenda - A Journal of Policy Analysis and Reform, Australian National University, College of Business and Economics, School of Economics, vol. 15(1), pages 49-66.

    More about this item

    Keywords

    income distribution; imputation; tax progressivity; Australia;

    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
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies

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