Measuring Inequality from Top to Bottom
This paper presents a new methodology to measure inequality that optimally combines household survey information and tax records to construct a complete income distribution. Combining the two data sources is necessary because, on the one hand, hous...
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| Format: | Working Paper |
| Language: | English en_US |
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World Bank, Washington, DC
2015
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| Online Access: | http://documents.worldbank.org/curated/en/2015/04/24353317/measuring-inequality-top-bottom http://hdl.handle.net/10986/21851 |
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okr-10986-218512021-04-23T14:04:05Z Measuring Inequality from Top to Bottom Diaz-Bazan, Tania INCOME DATA HOUSEHOLD#SURVEYS EQUITY INCOME TAXES HOUSEHOLD SURVEY REDUCING POVERTY LABOR INCOME INCOME#TAX ITS TAX RATE WAGES POLICIES CUMULATIVE DISTRIBUTION TRANSPARENCY INCOME INTEREST DISTRIBUTION FUNCTION INCOME DISTRIBUTIONS EXCHANGE INCOME GROUP DATA COLLECTION LABOR FORCE MEAN INCOME INCOME DISTRIBUTION INCOME SOURCES DISTRIBUTION OF INCOME TOTAL POPULATION INCOMES DEMOGRAPHIC CHARACTERISTICS POLICY DISCUSSIONS SHARES HOUSEHOLD SURVEY DATA TAX INCOME TAX SURVEYS MINIMUM INCOME PENSION TAX REVENUE INDIVIDUAL#INCOMES RENTS CUMULATIVE DISTRIBUTION FUNCTION ECONOMIC INEQUALITY TAXPAYER PERSONAL INCOME TAX DATA SETS ECONOMIC DEVELOPMENT DATA SET SHARE DEVELOPING ECONOMY INCOME SHARES TAX SYSTEM CAPITAL GAINS AVERAGE ANNUAL INEQUALITY MEASURES INCOME INEQUALITY INDIVIDUAL INCOMES PERSONAL INCOME AVERAGE INCOME TAXPAYERS GINI COEFFICIENT TAX LIABILITIES SURVEY DATA HOUSEHOLD#SURVEY TRANSFERS POLICY RESEARCH MEASUREMENT ERROR HOUSEHOLD SURVEYS MEASURING INEQUALITY DEMOGRAPHIC INCOME LEVELS PRODUCT GINI# COEFFICIENT INCOME LEVEL ECONOMIC RESEARCH TAXES INEQUALITY This paper presents a new methodology to measure inequality that optimally combines household survey information and tax records to construct a complete income distribution. Combining the two data sources is necessary because, on the one hand, household surveys do not accurately represent the wealthiest segment of the population, while tax records do; on the other hand, the opposite is true for the lower end of the income distribution: tax records only include incomes above a certain threshold. The key innovation of the proposed methodology—and the main difference from the existing literature—is the choice of an optimal income threshold b. The Gini coefficient for the population is then computed combining the conditional income distributions for incomes below b (using household survey data) and above b (using tax records). Central to this methodology is the fact that b is not chosen arbitrarily: it should be determined in such a way as to minimize reliance on household survey data to compute the top of the income distribution. In practice, the optimal b corresponds to the minimum income level that triggers mandatory tax filing. The proposed methodology is applied to the case of Colombia. 2015-05-04T19:30:46Z 2015-05-04T19:30:46Z 2015-04 Working Paper http://documents.worldbank.org/curated/en/2015/04/24353317/measuring-inequality-top-bottom http://hdl.handle.net/10986/21851 English en_US Policy Research Working Paper;No. 7237 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank World Bank, Washington, DC Publications & Research Publications & Research :: Policy Research Working Paper Colombia |
| repository_type |
Digital Repository |
| institution_category |
Foreign Institution |
| institution |
Digital Repositories |
| building |
World Bank Open Knowledge Repository |
| collection |
World Bank |
| language |
English en_US |
| topic |
INCOME DATA HOUSEHOLD#SURVEYS EQUITY INCOME TAXES HOUSEHOLD SURVEY REDUCING POVERTY LABOR INCOME INCOME#TAX ITS TAX RATE WAGES POLICIES CUMULATIVE DISTRIBUTION TRANSPARENCY INCOME INTEREST DISTRIBUTION FUNCTION INCOME DISTRIBUTIONS EXCHANGE INCOME GROUP DATA COLLECTION LABOR FORCE MEAN INCOME INCOME DISTRIBUTION INCOME SOURCES DISTRIBUTION OF INCOME TOTAL POPULATION INCOMES DEMOGRAPHIC CHARACTERISTICS POLICY DISCUSSIONS SHARES HOUSEHOLD SURVEY DATA TAX INCOME TAX SURVEYS MINIMUM INCOME PENSION TAX REVENUE INDIVIDUAL#INCOMES RENTS CUMULATIVE DISTRIBUTION FUNCTION ECONOMIC INEQUALITY TAXPAYER PERSONAL INCOME TAX DATA SETS ECONOMIC DEVELOPMENT DATA SET SHARE DEVELOPING ECONOMY INCOME SHARES TAX SYSTEM CAPITAL GAINS AVERAGE ANNUAL INEQUALITY MEASURES INCOME INEQUALITY INDIVIDUAL INCOMES PERSONAL INCOME AVERAGE INCOME TAXPAYERS GINI COEFFICIENT TAX LIABILITIES SURVEY DATA HOUSEHOLD#SURVEY TRANSFERS POLICY RESEARCH MEASUREMENT ERROR HOUSEHOLD SURVEYS MEASURING INEQUALITY DEMOGRAPHIC INCOME LEVELS PRODUCT GINI# COEFFICIENT INCOME LEVEL ECONOMIC RESEARCH TAXES INEQUALITY |
| spellingShingle |
INCOME DATA HOUSEHOLD#SURVEYS EQUITY INCOME TAXES HOUSEHOLD SURVEY REDUCING POVERTY LABOR INCOME INCOME#TAX ITS TAX RATE WAGES POLICIES CUMULATIVE DISTRIBUTION TRANSPARENCY INCOME INTEREST DISTRIBUTION FUNCTION INCOME DISTRIBUTIONS EXCHANGE INCOME GROUP DATA COLLECTION LABOR FORCE MEAN INCOME INCOME DISTRIBUTION INCOME SOURCES DISTRIBUTION OF INCOME TOTAL POPULATION INCOMES DEMOGRAPHIC CHARACTERISTICS POLICY DISCUSSIONS SHARES HOUSEHOLD SURVEY DATA TAX INCOME TAX SURVEYS MINIMUM INCOME PENSION TAX REVENUE INDIVIDUAL#INCOMES RENTS CUMULATIVE DISTRIBUTION FUNCTION ECONOMIC INEQUALITY TAXPAYER PERSONAL INCOME TAX DATA SETS ECONOMIC DEVELOPMENT DATA SET SHARE DEVELOPING ECONOMY INCOME SHARES TAX SYSTEM CAPITAL GAINS AVERAGE ANNUAL INEQUALITY MEASURES INCOME INEQUALITY INDIVIDUAL INCOMES PERSONAL INCOME AVERAGE INCOME TAXPAYERS GINI COEFFICIENT TAX LIABILITIES SURVEY DATA HOUSEHOLD#SURVEY TRANSFERS POLICY RESEARCH MEASUREMENT ERROR HOUSEHOLD SURVEYS MEASURING INEQUALITY DEMOGRAPHIC INCOME LEVELS PRODUCT GINI# COEFFICIENT INCOME LEVEL ECONOMIC RESEARCH TAXES INEQUALITY Diaz-Bazan, Tania Measuring Inequality from Top to Bottom |
| geographic_facet |
Colombia |
| relation |
Policy Research Working Paper;No. 7237 |
| description |
This paper presents a new methodology to
measure inequality that optimally combines household survey
information and tax records to construct a complete income
distribution. Combining the two data sources is necessary
because, on the one hand, household surveys do not
accurately represent the wealthiest segment of the
population, while tax records do; on the other hand, the
opposite is true for the lower end of the income
distribution: tax records only include incomes above a
certain threshold. The key innovation of the proposed
methodology—and the main difference from the existing
literature—is the choice of an optimal income threshold b.
The Gini coefficient for the population is then computed
combining the conditional income distributions for incomes
below b (using household survey data) and above b (using tax
records). Central to this methodology is the fact that b is
not chosen arbitrarily: it should be determined in such a
way as to minimize reliance on household survey data to
compute the top of the income distribution. In practice, the
optimal b corresponds to the minimum income level that
triggers mandatory tax filing. The proposed methodology is
applied to the case of Colombia. |
| format |
Working Paper |
| author |
Diaz-Bazan, Tania |
| author_facet |
Diaz-Bazan, Tania |
| author_sort |
Diaz-Bazan, Tania |
| title |
Measuring Inequality from Top to Bottom |
| title_short |
Measuring Inequality from Top to Bottom |
| title_full |
Measuring Inequality from Top to Bottom |
| title_fullStr |
Measuring Inequality from Top to Bottom |
| title_full_unstemmed |
Measuring Inequality from Top to Bottom |
| title_sort |
measuring inequality from top to bottom |
| publisher |
World Bank, Washington, DC |
| publishDate |
2015 |
| url |
http://documents.worldbank.org/curated/en/2015/04/24353317/measuring-inequality-top-bottom http://hdl.handle.net/10986/21851 |
| _version_ |
1764449434322599936 |