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Top Income Adjustments and Inequality: An Investigation of the EU-SILC

Rafael Carranza, Marc Morgan and Brian Nolan
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Marc Morgan: PSE - Paris School of Economics - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris sciences et lettres - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement, WIL - World Inequality Lab

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Abstract: In this paper we bridge the gap between two different approaches to measure inequality: one based on household surveys and summary measures such as the Gini, and the other focused on taxable income and top income shares. We explore how these approaches adjust the Gini for equivalised household income in 26 European countries over 2003-2017 using the EU-SILC, focusing on the World Inequality Database (WID) adjustment as proposed in Blanchet et al. (2020). On average, the Gini increases by around 2.4 points as a result of the WID adjustment, for both gross and disposable income, with notable differences across countries, affecting rankings, despite limited impact on trends. We find that differences in inequality depend less on the adjustment method and more on whether it relies on external data sources such as tax data. In fact, SILC countries that rely on administrative register data experience relatively small changes in inequality after the WID adjustment. For recent years, we find that the Gini for 'non-register' countries increases by 2.8 points on average while in 'register' countries it does so by 0.9 points. We conclude by proposing ways in which household surveys can improve their representativeness of income and living conditions.

Keywords: Inequality; Reweighting; Survey Representativeness; Top incomes (search for similar items in EconPapers)
Date: 2021-06
New Economics Papers: this item is included in nep-eur
Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-03321885
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Related works:
Journal Article: Top Income Adjustments and Inequality: An Investigation of the EU‐SILC (2023) Downloads
Working Paper: Top Income Adjustments and Inequality: An Investigation of the EU-SILC (2021) Downloads
Working Paper: Top Income Adjustments and Inequality: An Investigation of the EU-SILC (2021) Downloads
Working Paper: Top Income Adjustments and Inequality: An Investigation of the EU-SILC (2021) Downloads
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