Top income shares and inequality: Evidences from Thailand

Abstract

This paper attempts to improve a traditional measure of income inequality in Thailand, that is, the Gini coefficient, by incorporating information about top income groups from tax return data. Traditionally, the Gini coefficient is calculated by using individuals' income data from the socio-economic survey (SES). In the SES, the poor are relatively well-represented, while the rich or the top income groups are mostly absent. Therefore, the survey-based Gini coefficient may not give an accurate account of the true state of the income distribution in Thailand. We followed the Alvaredo methodology by making use of the tax returns data in estimating the share of the top income group and incorporating this group into the calculation of an alternative Gini coefficient. The “corrected” Gini coefficient overturned the prediction of the Kuznets hypothesis that foresaw an improved income distribution in Thailand to continue in 2007 and 2009. Our calculation showed that the income distribution worsened in 2009. This was in line with the findings on the top income shares from tax returns data.