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Measuring UK top incomes

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

The Warwick Economics Research Paper Series (TWERPS) from University of Warwick, Department of Economics

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.

Keywords: income inequality; measurement; national accounts; top shares JEL Classification: D31; D63; E01; H2 (search for similar items in EconPapers)
Date: 2021
New Economics Papers: this item is included in nep-ltv
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Persistent link: https://EconPapers.repec.org/RePEc:wrk:warwec:1334

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