Top incomes and inequality in the UK: reconciling estimates from household survey and tax return data

Richard Burkhauser, Nicolas Hérault, Stephen Jenkins and Roger Wilkins ()
Authors registered in the RePEc Author Service: Nicolas Hérault

Oxford Economic Papers, 2018, vol. 70, issue 2, 301-326

Abstract: We provide the first systematic comparison of UK inequality estimates derived from tax data (World Wealth and Income Database) and household survey data (the Households Below Average Income [HBAI] subfile of the Family Resources Survey). We document by how much existing survey data underestimate top income shares relative to tax data. Exploiting the flexibility that access to unit-record survey data provides, we then derive new top-income-adjusted data. These data enable us to: better track tax-data-estimated top income shares; change the definitions of income, income-sharing unit, and unit of analysis used and thereby undertake more comparable cross-national comparisons (we provide a UK-US illustration); and examine UK inequality levels and trends using four summary indices. Our estimates reveal a greater rise in the inequality of equivalized gross household income among all persons between the mid-1990s and late 2000s than shown by the corresponding HBAI series, especially between 2004/05 and 2007/08.

JEL-codes: C81 D31 (search for similar items in EconPapers)
Date: 2018
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Citations: View citations in EconPapers (42)

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