Bottom incomes and the measurement of poverty and inequality

Vladimir Hlasny, Lidia Ceriani () and Paolo Verme

No 535, Working Papers from ECINEQ, Society for the Study of Economic Inequality

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 explains 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.

Keywords: Bottom incomes; income inequality; poverty; self-employment; Mediterranean; Middle East; Pareto; random forest. (search for similar items in EconPapers)
JEL-codes: D31 I32 N35 (search for similar items in EconPapers)
Pages: 33 pages
Date: 2020-05
New Economics Papers: this item is included in nep-dev
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7)

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Related works:
Journal Article: Bottom Incomes and the Measurement of Poverty and Inequality (2022)
Working Paper: Bottom Incomes and the Measurement of Poverty and Inequality (2020)
Working Paper: Bottom Incomes and the Measurement of Poverty and Inequality (2020)
Working Paper: Bottom incomes and the measurement of poverty and inequality (2020)
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