Measuring top income shares in the UK

Arun Advani, Andy Summers and Hannah Tarrant
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Andy Summers: London School of Economics, LSE III, CAGE and IFS
Hannah Tarrant: London School of EconomicsLSE III.

CAGE Online Working Paper Series from Competitive Advantage in the Global Economy (CAGE)

Abstract: Information about the share of total income held by the richest 1%, or other top income groups, is increasingly used to discuss inequality levels and trends within and between nations. A top income share is the ratio of the total income held by the top income group divided by total personal income (the ‘income control total’). We compare two approaches to estimating income control totals: the ‘external’ approach used by the World Inequality Database, and an augmented ‘internal’ approach. We argue in favour of the latter, with reference to five desirable properties that a top share series would ideally possess. The choice matters: our augmented ‘internal’ approach yields estimates of the UK top 1% share that are around 2 percentage points higher than the ‘external’ approach.

Keywords: income inequality; measurement; national accounts; top shares JEL Classification: (search for similar items in EconPapers)
Date: 2022
New Economics Papers: this item is included in nep-ltv
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https://warwick.ac.uk/fac/soc/economics/research/c ... tions/wp610.2022.pdf

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Working Paper: Measuring top income shares in the UK (2023)
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Persistent link: https://EconPapers.repec.org/RePEc:cge:wacage:610

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