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Measuring UK top incomes

Author

Listed:
  • Advani, Arun

    (University of Warwick, CAGE Research Centre, the Institute for Fiscal Studies (IFS), and the LSE International Inequalities Institute (LSE III))

  • Andy Summers, Andy

    (London School of Economics, LSE III, CAGE and IFS)

  • Tarrant, Hannah

    (LSE III)

Abstract

We compare two approaches to measuring UK top income shares - the share of income going to particular subgroups, such as the top 1%. We set out four criteria that an ideal top share series should satisfy: (i) comparability between numerator and denominator ; (ii) comparability over time ; (iii) international comparability; and (iv) practical sustainability. Our preferred approach meets three of these; by contrast the approach currently used to produce UK fiscal income series meets none of them. Changing to our preferred approach matters quantitatively : the share of income going to the top 1% is 2 percentage points higher, but rising more slowly, than under the alternative.

Suggested Citation

  • Advani, Arun & Andy Summers, Andy & Tarrant, Hannah, 2021. "Measuring UK top incomes," The Warwick Economics Research Paper Series (TWERPS) 1334, University of Warwick, Department of Economics.
  • Handle: RePEc:wrk:warwec:1334
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    References listed on IDEAS

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    Cited by:

    1. Arun Advani & George Bangham & Jack Leslie, 2021. "The UK's wealth distribution and characteristics of high‐wealth households," Fiscal Studies, John Wiley & Sons, vol. 42(3-4), pages 397-430, September.

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    More about this item

    Keywords

    income inequality ; measurement ; national accounts ; top shares JEL Classification: D31 ; D63 ; E01 ; H2;
    All these keywords.

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement

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