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A Different Perspective on the Evolution of UK Income Inequality

Author

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  • Atkinson, Anthony B.

    (Nuffield College, Oxford)

  • Jenkins, Stephen P.

    (London School of Economics)

Abstract

This paper scrutinizes the conventional wisdom about trends in UK income inequality and also places contemporary inequality in a much longer historical perspective. We combine household survey and income tax data to provide better coverage of all income ranges from the bottom to the very top. We make a case for studying distributions of income between tax units (i.e. not assuming the full income sharing that goes with the use of the household as the unit of analysis) for reasons of principle as well as data harmonization. We present evidence that income inequality in the UK is as least as high today as it was just before the start of World War 2.

Suggested Citation

  • Atkinson, Anthony B. & Jenkins, Stephen P., 2018. "A Different Perspective on the Evolution of UK Income Inequality," IZA Discussion Papers 11884, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp11884
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    References listed on IDEAS

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    1. Facundo Alvaredo & Anthony Atkinson & Lucas Chancel & Thomas Piketty & Emmanuel Saez & Gabriel Zucman, 2016. "Distributional National Accounts (DINA) Guidelines : Concepts and Methods used in WID.world," Working Papers halshs-02794308, HAL.
    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. Editorial Article, 0. "The Information for Authors," Economics of Contemporary Russia, Regional Public Organization for Assistance to the Development of Institutions of the Department of Economics of the Russian Academy of Sciences, issue 4.
    4. Andrew Leigh, 2007. "How Closely Do Top Income Shares Track Other Measures of Inequality?," Economic Journal, Royal Economic Society, vol. 117(524), pages 619-633, November.
    5. Alissa Goodman & Steven Webb, 1994. "For richer, for poorer: the changing distribution of income in the United Kingdom, 1961-91," Fiscal Studies, Institute for Fiscal Studies, vol. 15(4), pages 29-62, November.
    6. Anthony Atkinson & Thomas Piketty, 2007. "Top incomes over the twentieth century: A contrast between continental european and english-speaking countries," Post-Print halshs-00754859, HAL.
    7. Editorial Article, 0. "The Information for Authors," Economics of Contemporary Russia, Regional Public Organization for Assistance to the Development of Institutions of the Department of Economics of the Russian Academy of Sciences, issue 3.
    8. Editorial Article, 0. "The Information for Authors," Economics of Contemporary Russia, Regional Public Organization for Assistance to the Development of Institutions of the Department of Economics of the Russian Academy of Sciences, issue 2.
    9. Editorial Article, 0. "The Information for Authors," Economics of Contemporary Russia, Regional Public Organization for Assistance to the Development of Institutions of the Department of Economics of the Russian Academy of Sciences, issue 2.
    10. Blundell, Richard & Joyce, Robert & Norris Keiller, Agnes & Ziliak, James P., 2018. "Income inequality and the labour market in Britain and the US," Journal of Public Economics, Elsevier, vol. 162(C), pages 48-62.
    11. Alvaredo, Facundo, 2011. "A note on the relationship between top income shares and the Gini coefficient," Economics Letters, Elsevier, vol. 110(3), pages 274-277, March.
    12. Gazeley, Ian & Newell, Andrew T. & Reynolds, Kevin & Rufrancos, Hector Gutierrez, 2017. "What Really Happened to British Inequality in the Early 20th Century? Evidence from National Household Expenditure Surveys 1890–1961," IZA Discussion Papers 11071, Institute of Labor Economics (IZA).
    13. Richard V Burkhauser & Nicolas Hérault & Stephen P Jenkins & Roger Wilkins, 2018. "Top incomes and inequality in the UK: reconciling estimates from household survey and tax return data," Oxford Economic Papers, Oxford University Press, vol. 70(2), pages 301-326.
    14. Editorial Article, 0. "The Information for Authors," Economics of Contemporary Russia, Regional Public Organization for Assistance to the Development of Institutions of the Department of Economics of the Russian Academy of Sciences, issue 4.
    15. Editorial Article, 0. "The Information for Authors," Economics of Contemporary Russia, Regional Public Organization for Assistance to the Development of Institutions of the Department of Economics of the Russian Academy of Sciences, issue 3.
    16. Editorial Article, 0. "The Information for Authors," Economics of Contemporary Russia, Regional Public Organization for Assistance to the Development of Institutions of the Department of Economics of the Russian Academy of Sciences, issue 1.
    17. Atkinson, A. B. & Piketty, Thomas (ed.), 2007. "Top Incomes Over the Twentieth Century: A Contrast Between Continental European and English-Speaking Countries," OUP Catalogue, Oxford University Press, number 9780199286881.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Advani, Arun & Burgherr, David & Savage, Mike & Summers, Andrew, 2022. "The UK’s global economic elite: a sociological analysis using tax data," LSE Research Online Documents on Economics 114607, London School of Economics and Political Science, LSE Library.
    2. Christopher Wimer & Zachary Parolin & Anny Fenton & Liana Fox & Christopher Jencks, 2020. "The Direct Effect of Taxes and Transfers on Changes in the U.S. Income Distribution, 1967–2015," Demography, Springer;Population Association of America (PAA), vol. 57(5), pages 1833-1851, October.
    3. Andrew Seltzer & Martin Shanahan & Claire Wright, 2022. "The Rise and Fall and Rise (?) of Economic History in Australia," CEH Discussion Papers 05, Centre for Economic History, Research School of Economics, Australian National University.
    4. Branko Milanovic, 2022. "After the Financial Crisis: The Evolution of the Global Income Distribution Between 2008 and 2013," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 68(1), pages 43-73, March.
    5. Advani, Arun & Summers, Andy & Tarrant, Hannah, 2022. "Measuring top income shares in the UK," CAGE Online Working Paper Series 610, Competitive Advantage in the Global Economy (CAGE).
    6. Tahnee Christelle Ooms, 2021. "Correcting the Underestimation of Capital Incomes in Inequality Indicators: with an Application to the UK, 1997–2016," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 157(3), pages 929-953, October.
    7. Advani, Arun & Summers, Andy & Tarrant, Hannah, 2020. "Measuring UK top incomes," CAGE Online Working Paper Series 490, Competitive Advantage in the Global Economy (CAGE).
    8. Jenkins, Stephen P., 2022. "Getting the Measure of Inequality," IZA Discussion Papers 14996, Institute of Labor Economics (IZA).
    9. Slawomir Pastuszka & Katarzyna Pastuszka, 2022. "Cohesion or In-cohesion of Economic and Social Development of the UK's Regions," European Research Studies Journal, European Research Studies Journal, vol. 0(2), pages 3-18.
    10. Ian Gazeley & Andrew Newell & Kevin Reynolds & Hector Rufrancos, 2024. "Household structure, labour participation, and economic inequality in Britain, 1937–61," Economic History Review, Economic History Society, vol. 77(1), pages 41-59, February.
    11. Ooms, Tahnee, 2021. "Correcting the underestimation of capital incomes in inequality indicators: with an application to the UK, 1997–2016," LSE Research Online Documents on Economics 108900, London School of Economics and Political Science, LSE Library.

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    More about this item

    Keywords

    income tax data; Gini coefficient; household; tax unit; inequality; household survey data;
    All these keywords.

    JEL classification:

    • C46 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Specific Distributions
    • 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

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