The micro-macro gap for capital income in the Eurozone

Abstract

This paper analyzes the mismatch of capital income information between household surveys and macro aggregates in the Eurozone. We contrast data from recent EU-SILC and HFCS waves with Eurostat national accounts for single components of capital income. We find a considerable gap between micro and macro data even when carefully considering comparability issues. On average, EU-SILC and HFCS cover only 26% and 22% of national accounts totals in the Eurozone countries. We further assess which amount of this gap that can be traced back to (a) the undercoverage of the top in survey data and (b) general underreporting of capital income across the distribution. To calculate augmented capital incomes, we utilize wealth information from HFCS and apply Pareto estimations and varying rates of return to capital.