Accounting for Imputed and Capital Income Flows

Abstract

This chapter aims to give a comprehensive view of the joint impact of two components of investment income, namely (monetary) capital income (CI) and (nonmonetary) imputed rent (IR). It uses more than twenty waves of consistently measured income data from the German Socio-Economic Panel. After describing the microdata used and the methods applied to investigate the impact of investment income on overall inequality and poverty, it presents the empirical findings with respect to the incidence and relevance, separately, of the two components of investment income, CI and IR. It considers these components in the “full” income concept relative to a “baseline” income concept net of investment income in order to investigate their respective impacts on inequality and poverty. Decomposition by subgroup is used to identify beneficiaries of investment income. The final section concludes.