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How do services of owner-occupied housing affect income inequality and redistribution?

Author

Listed:
  • Jorge Onrubia

    (Universidad Complutense de Madrid)

  • M. Carmen Rodado

    (Universidad Rey Juan Carlos)

  • Luis Ayala

    (Universidad Rey Juan Carlos)

Abstract

This paper aims at analyzing the redistributive impact that the inclusion of imputed rental market value of owner-occupied housing would have when quantifying ability to pay, rather than the legal imputation that considers cadastral values. We consider the Spanish Personal Income Tax as reference, due to the differential treatment that provides to this type of income, together with the higher percentages of ownership for primary residence in Spain. The analysis is carried out through a micro-simulation exercise in which different scenarios are proposed. Our results show that the measurement of income including market value incomes resulting from actual or potential use of significantly modifies income inequality and IRPF progressivity and redistribution.

Suggested Citation

  • Jorge Onrubia & M. Carmen Rodado & Luis Ayala, 2009. "How do services of owner-occupied housing affect income inequality and redistribution?," Working Papers 112, ECINEQ, Society for the Study of Economic Inequality.
    • Handle: RePEc:inq:inqwps:ecineq2009-112
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    File URL: http://www.ecineq.org/milano/WP/ECINEQ2009-112.pdf
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    Cited by:

    1. Alexeev, Sergey, 2020. "The role of imputed rents in intergenerational income mobility in three countries," Journal of Housing Economics, Elsevier, vol. 49(C).
    2. 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.
    3. 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 and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 19(3), pages 167-179.
    4. Javier Ballesteros Muñoz & Jorge Onrubia, 2022. "Régimen de tenencia de la vivienda habitual y desigualdad de la renta de los hogares españoles," Studies on the Spanish Economy eee2022-26, FEDEA.
    5. Tuukka Saarimaa, 2011. "Imputed Rental Income, Taxation and Income Distribution in Finland," Urban Studies, Urban Studies Journal Limited, vol. 48(8), pages 1695-1714, June.
    6. Simone Pellegrino & Massimiliano Piacenza & Gilberto Turati, 2011. "Assessing the Distributional Effects of Housing Taxation in Italy: From the Actual Tax Code to Imputed Rent," CESifo Working Paper Series 3368, CESifo.
    7. Figari, Francesco & Paulus, Alari & Sutherland, Holly & Tsakloglou, Panos & Verbist, Gerlinde & Zantomio, Francesca, 2012. "Taxing Home Ownership: Distributional Effects of Including Net Imputed Rent in Taxable Income," IZA Discussion Papers 6493, Institute of Labor Economics (IZA).
    8. 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.
    9. Garrido-Yserte, Rubén & Mañas-Alcón, Elena & Gallo-Rivera, Maria Teresa, 2012. "Housing and cost of living: Application to the Spanish regions," Journal of Housing Economics, Elsevier, vol. 21(3), pages 246-255.
    10. Braga, Breno & Lerman, Robert I., 2019. "Accounting for homeownership in estimating real income growth," Economics Letters, Elsevier, vol. 174(C), pages 9-12.

    More about this item

    Keywords

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    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • D33 - Microeconomics - - Distribution - - - Factor Income Distribution
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies

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