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What Has Been Happening to UK Income Inequality Since the Mid-1990s? Answers from Reconciled and Combined Household Survey and Tax Return Data

Author

Listed:
  • Richard V. Burkhauser

    (Department of Policy Analysis and Management, Cornell University)

  • Nicolas Hérault

    () (Melbourne Institute of Applied Economic and Social Research, The University of Melbourne)

  • Stephen P. Jenkins

    (Department ofSocial Policy, London School of Economics)

  • Roger Wilkins

    () (Melbourne Institute of Applied Economic and Social Research, The University of Melbourne)

Abstract

Estimates of UK income inequality trends differ substantially according to whether estimates are based on household survey data (used for official statistics) or tax return data (used in the top incomes literature). We reconcile differences in variable definitions and combine survey and tax return data in order to take advantage of the much better coverage of top incomes in the latter, and provide improved estimates of UK inequality trends since the mid-1990s. We show there was a marked increase in income inequality in the early 2000s that survey-based estimates do not reveal, and our conclusions are robust to changes in the definitions of income, income-sharing unit, and summary inequality measure. In addition, our reconciled and combined data provide more comparable estimates of UK-US inequality trends than the top incomes literature to date.

Suggested Citation

  • Richard V. Burkhauser & Nicolas Hérault & Stephen P. Jenkins & Roger Wilkins, 2016. "What Has Been Happening to UK Income Inequality Since the Mid-1990s? Answers from Reconciled and Combined Household Survey and Tax Return Data," Melbourne Institute Working Paper Series wp2016n05, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne.
  • Handle: RePEc:iae:iaewps:wp2016n05
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    References listed on IDEAS

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    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. What Has Been Happening to UK Income Inequality since the Mid-1990s? Answers from Reconciled and Combined Household Survey and Tax Return Data
      by maximorossi in NEP-LTV blog on 2016-03-01 18:11:50
    2. Inequality and poverty
      by chris in Stumbling and Mumbling on 2018-04-03 12:54:55

    Citations

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    Cited by:

    1. A. B. Atkinson, 2017. "Pareto and the Upper Tail of the Income Distribution in the UK: 1799 to the Present," Economica, London School of Economics and Political Science, vol. 84(334), pages 129-156, April.
    2. Stephen P. Jenkins, 2017. "Pareto Models, Top Incomes and Recent Trends in UK Income Inequality," Economica, London School of Economics and Political Science, vol. 84(334), pages 261-289, April.
    3. Brian A'Hearn & Nicola Amendola & Giovanni Vecchi, 2016. "On Historical Household Budgets," Rivista di storia economica, Società editrice il Mulino, issue 2, pages 137-176.
    4. Marcelo Medeiros & Juliana Castro Galvão & Luísa Azevedo Nazareno, 2018. "Correcting the Underestimation of Top Incomes: Combining Data from Income Tax Reports and the Brazilian 2010 Census," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 135(1), pages 233-244, January.
    5. Thomas Blanchet & Ignacio Flores & Marc Morgan, 2018. "The Weight of the Rich: Improving Surveys Using Tax Data," Working Papers hal-02878315, HAL.
    6. Francesco Olivanti, 2018. "Standard Budgets in Spanish Economic History: a User’s Guide to Sources and Methods," HHB Working Papers Series 10, The Historical Household Budgets Project.
    7. Pawel Bukowski & Filip Novokmet, 2019. "Between communism and capitalism: long-term inequality in Poland, 1892-2015," CEP Discussion Papers dp1628, Centre for Economic Performance, LSE.
    8. Paolo Di Caro, 2018. "Redistribution in real-world PIT: Evidence from Italian tax records," Working Papers wp2018-2, Ministry of Economy and Finance, Department of Finance.
    9. Pawel Bukowski & Filip Novokmet, 2019. "Between Communism and Capitalism: Long-Term Inequality in Poland, 1892- 2015," World Inequality Lab Working Papers hal-02876995, HAL.
    10. Chris Belfield & Richard Blundell & Jonathan Cribb & Andrew Hood & Robert Joyce, 2017. "Two Decades of Income Inequality in Britain: The Role of Wages, Household Earnings and Redistribution," Economica, London School of Economics and Political Science, vol. 84(334), pages 157-179, April.
    11. Bukowski, Pawel & Novokmet, Filip, 2019. "Between communism and capitalism: long-term inequality in Poland, 1892-2015," LSE Research Online Documents on Economics 102834, London School of Economics and Political Science, LSE Library.
    12. Bukowski, Pawel & Novokmet, Filip, 2019. "Between communism and capitalism: long-term inequality in Poland, 1892-2015," LSE Research Online Documents on Economics 102814, London School of Economics and Political Science, LSE Library.
    13. Metzing, Maria & Bartels, Charlotte, 2016. "An integrated approach for top-corrected Ginis," VfS Annual Conference 2016 (Augsburg): Demographic Change 145818, Verein für Socialpolitik / German Economic Association.
    14. Jonathan Cribb & Carl Emmerson, 2017. "Can’t wait to get my pension: ?the effect of raising the female state pension age on income, poverty and deprivation," IFS Working Papers W17/10, Institute for Fiscal Studies.
    15. Pawel Bukowski & Filip Novokmet, 2019. "Between Communism and Capitalism: Long-Term Inequality in Poland, 1892- 2015," Working Papers hal-02876995, HAL.
    16. Richard V. Burkhauser & Markus H. Hahn & Roger Wilkins, 2016. "Top Incomes and Inequality in Australia: Reconciling Recent Estimates from Household Survey and Tax Return Data," Melbourne Institute Working Paper Series wp2016n19, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne.

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    More about this item

    Keywords

    Inequality; income inequality; top income shares; HBAI; SPI; top incomes; tax return data; survey data;
    All these keywords.

    JEL classification:

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

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