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Survey Under-Coverage of Top Incomes and Estimation of Inequality: What is the Role of the UK's SPI Adjustment?
[journal article]
Abstract Survey under-coverage of top incomes leads to bias in survey-based estimates of overall income inequality. Using income tax record data in combination with survey data is a potential approach to address the problem; we consider here the UK's pioneering ‘SPI adjustment’ method that implements this id... view more
Survey under-coverage of top incomes leads to bias in survey-based estimates of overall income inequality. Using income tax record data in combination with survey data is a potential approach to address the problem; we consider here the UK's pioneering ‘SPI adjustment’ method that implements this idea. Since 1992, the principal income distribution series (reported annually in Households Below Average Income) has been based on household survey data in which the incomes of a small number of ‘very rich’ individuals are adjusted using information from ‘very rich’ individuals in personal income tax return data. We explain what the procedure involves, reveal the extent to which it addresses survey under-coverage of top incomes and show how it affects estimates of overall income inequality. More generally, we assess whether the SPI adjustment is fit for purpose and consider whether variants of it could be employed by other countries.... view less
Keywords
income; difference in income; income distribution; income tax; inequality; data capture; data quality
Classification
Methods and Techniques of Data Collection and Data Analysis, Statistical Methods, Computer Methods
General Sociology, Basic Research, General Concepts and History of Sociology, Sociological Theories
Free Keywords
survey under-coverage; SPI adjustment; top incomes; tax return data; survey data; EU-SILC - series ilc_di12
Document language
English
Publication Year
2018
Page/Pages
p. 213-240
Journal
Fiscal Studies, 39 (2018) 2
DOI
https://doi.org/10.1111/1475-5890.12158
ISSN
1475-5890
Status
Published Version; peer reviewed