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Bottom Incomes and the Measurement of Poverty and Inequality

Author

Listed:
  • Vladimir Hlasny

    (Ewha Womans University)

  • Lidia Ceriani

    (Georgetown University)

  • Paolo Verme

    (The World Bank)

Abstract

Incomes in surveys suffer from various measurement problems, most notably in the tails of their distributions. We study the prevalence of negative and zero incomes, and their implications for inequality and poverty measurement relying on 57 harmonized surveys covering 12 countries over the period 1995-2016. The paper ex-plains the composition and sources of negative and zero incomes and assesses the distributional impacts of alternative correction methods on poverty and inequality measures. It finds that the main source of negative disposable incomes is negative self-employment income, and that high tax, social security withholdings and high self-paid social-security contributions account for negative incomes in some countries. Using detailed information on expenditure, we conclude that households with negative incomes are typically as well off as, or even better, than other households in terms of material wellbeing. By contrast, zero-income households are found to be materially deprived. Adjusting poverty and inequality measures for these findings can alter these measures significantly.

Suggested Citation

  • Vladimir Hlasny & Lidia Ceriani & Paolo Verme, 2020. "Bottom Incomes and the Measurement of Poverty and Inequality," Working Papers 1393, Economic Research Forum, revised 20 Apr 2020.
    • Handle: RePEc:erg:wpaper:1393
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    Cited by:

    1. Ceriani, Lidia & Hlasny, Vladimir & Verme, Paolo, 2021. "Bottom Incomes and the Measurement of Poverty: A Brief Assessment of the Literature," GLO Discussion Paper Series 914, Global Labor Organization (GLO).
    2. Adam Szulc, 2022. "Reconstruction of the Social Cash Transfers System in Poland and Household Well-being: 2015 - 2018 Evidence," KAE Working Papers 2022-076, Warsaw School of Economics, Collegium of Economic Analysis.
    3. 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.
    4. Pazzona, Matteo, 2024. "Revisiting the Income Inequality-Crime Puzzle," World Development, Elsevier, vol. 176(C).
    5. Al-Mouksit AKIM & Mahdi Ben JELLOUL & Leo CZAJKA & Anne-Sophie ROBILLIARD, 2020. "Collect more, spend better? Assessing the incidence of fiscal systems and public spending in three Francophone West African countries," Working Paper 3023a15d-161b-4025-a0eb-e, Agence française de développement.
    6. Vladimir Hlasny & Paolo Verme, 2022. "On the ‘Arab Inequality Puzzle’: A Comment," Development and Change, International Institute of Social Studies, vol. 53(2), pages 448-458, March.
    7. Ignacio Pineda-Devesa & Joan Martín-Montaner, 2024. "Trade and Inequality: Impact on Spanish Regional Income Distributions," Working Papers 2024/09, Economics Department, Universitat Jaume I, Castellón (Spain).
    8. Robert Musil & Jiannis Kaucic, 2024. "Housing Market Segmentation as a Driver of Urban Micro-Segregation? An In-Depth Analysis of Two Viennese Districts," Land, MDPI, vol. 13(9), pages 1-25, September.
    9. Vladimir Hlasny & Shireen AlAzzawi, 2020. "Return Migration and Earnings Mobility in Egypt, Jordan and Tunisia," Working Papers 562, ECINEQ, Society for the Study of Economic Inequality.

    More about this item

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • I32 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Measurement and Analysis of Poverty
    • N35 - Economic History - - Labor and Consumers, Demography, Education, Health, Welfare, Income, Wealth, Religion, and Philanthropy - - - Asia including Middle East

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