Income Statistics Research Articles

Economic poverty among children and adolescents in the Nordic countries.

This study aimed to identify applied definitions and measurements of economic poverty and to explore the proportions and characteristics of children and adolescents living in economic poverty in Denmark, Finland, Iceland, Norway and Sweden during the last decade and to compare various statistics between the Nordic countries. Official data from central national authorities on statistics, national reports and European Union Statistics of income and living conditions data were collected and analysed during 2015-2016. The proportion of Nordic children living in economic poverty in 2014 ranged from 9.4% in Norway to 18.5% in Sweden. Compared with the European Union average, from 2004 to 2014 Nordic families with dependent children experienced fewer difficulties in making their money last, even though Icelandic families reported considerable difficulties. The characteristics of children living in economic poverty proved to be similar in the five countries and were related to their parents' level of education and employment, single-parent households and - in Denmark, Norway and Sweden - to immigrant background. In Finland, poverty among children was linked in particular to low income in employed households. This study showed that economic poverty among Nordic families with dependent children has increased during the latest decade, but it also showed that poverty rates are not necessarily connected to families' ability to make their money last. Therefore additional studies are needed to explore existing policies and political commitments in the Nordic countries to compensate families with dependent children living in poverty.

El Salvador: Technical Assistance Report-Balance of Payments, International Investment Position, and Secondary Income Statistics (July 14-22, 2014)

El Salvador: Technical Assistance Report-Balance of Payments, International Investment Position, and Secondary Income Statistics (July 14-22, 2014)

Millionaires or Job Creators: What Really Happens to Employment Growth When You Stick It to the Rich?

We provide empirical evidence on the consequences of relatively higher tax burdens on the rich for aggregate employment growth using a newly constructed time series for 1947 through 2011 derived from the US Statistics of Income. In response to shifts in the relative federal tax burden toward the rich, we find statistically significant positive effects on employment growth in the short run and some evidence of negative effects on employment growth in the long run. Among our robustness checks, we use the Romer and Romer narrative record analysis to restrict our sample to a period of exclusively exogenous tax changes. The results hold in the restricted sample and are also consistent across alternative specifications and estimation methods, including unrestricted and Bayesian vector autoregressive.

Do Older Americans Have More Income Than We Think?

The Current Population Survey Annual Social and Economic Supplement (CPS ASEC) is the source of the nation’s official household income and poverty statistics. In 2012, the CPS ASEC showed that median household income was $33,800 for householders aged 65 and over and the poverty rate was 9.1 percent for persons aged 65 and over. When we instead use an extensive array of administrative income records linked to the same CPS ASEC sample, we find that median household income was $44,400 (30 percent higher) and the poverty rate was just 6.9 percent. We demonstrate that large differences between survey and administrative record estimates are present within most demographic subgroups and are not easily explained by survey design features or processes such as imputation. Further, we show that the discrepancy is mainly attributable to underreporting of retirement income from defined benefit pensions and retirement account withdrawals. Using archived survey and administrative record data, we extend our analysis back to 1990 and provide evidence of underreporting from an earlier period. We also document a growing divergence over time between the two measures of median income which is in turn driven by the growth in retirement income underreporting. Turning to synthetic cohort analysis, we show that in recent years, most households do not experience substantial declines in total incomes upon retirement or any increases in poverty rates. Our results have important implications for assessing the relative value of different sources of income available to older Americans, including income from the nation’s largest retirement program, Social Security. We caution, however, that our findings apply to the population aged 65 and over in 2012 and cannot easily be extrapolated to future retirees.

Economic Valuation of Female Family Labour in Agriculture and Animal Husbandry: A Study in a Prosperous Agricultural Region

The present paper seeks to examine the economic contribution of women of cultivating households in agriculture and allied activities in an agriculturally prosperous region. The paper quantifies the labour time spent by household women in activities related to farming and animal husbandry. It also seeks to measure the economic contribution of women in the household income in monetary terms. The study is based on primary data collected through a survey of 240 farm households belonging to Muzaffarnagar and Baghpat districts located in agriculturally developed western Uttar Pradesh (UP). The study reveals that household women contribute about 20 per cent of agricultural income and 61 per cent of animal husbandry income in farm households. The contribution of female workers in family income was significant in all the farm size categories, though the share of women in family income was found to be negatively correlated with farm size. The study clearly shows that women household members contribute a significant amount of family labour and income in the farm households. It is, therefore, important that these women are treated as workers and their contribution is duly accounted for in national income statistics. Government agencies working in the field of agricultural development should focus on women workers as a special category. They should be provided proper training in agriculture and animal husbandry to improve their efficiency and knowledge. Steps need to be taken to ensure access of rural women to agricultural and livestock extension services and other support mechanisms.

Labour supply in Austria: an assessment of recent developments and the effects of a tax reform

We apply a structural discrete choice framework to estimate income-specific own-wage and cross-wage labour supply elasticities in regard to working hours and participation for married and single males and females in Austria. We use data from the Austrian components of the European Statistics of Income and Living Conditions from 2004 to 2012. Own-wage elasticities are very small for males and slightly higher for females. Cross-wage elasticities are practically zero for males and slightly negative for females. Male and female own-wage elasticities decrease with higher incomes. Over time female labour supply elasticities decrease. Furthermore, we assess the labour supply and fiscal effects of the Austrian tax reform of 2016. We find a total increase in working hours by 0.71%. The labour supply effects are stronger on the intensive margin, for females and for low-income earners. On total the tax reform induces a tax relief of 4.7 billion Euros. The positive effects on tax burden and disposable income increase with the individual income.

The Mortgage Interest Tax Deduction and the Great Recession

This paper revisits the mortgage interest deduction (MID) in the U.S. and its distribution across households using ZIP-code level data from the IRS Statistics of Income. Since the Great Recession, the total and average amount of mortgage interest deducted has fallen significantly along with the number of deduction claimants as the home-ownership rate has declined dramatically since the peak of the mid-2000’s housing boom. We also use housing supply as an instrumental variable to better understand how geographic dispersion in housing prices can account for variation in ZIP-code average MID claims. While housing tax benefits are concentrated in high-income areas and regions with inelastic supply, the dollar share of the MID has fallen among the wealthy since the housing bust. We further discuss the implications for policy changes such as the prospects of capping or eliminating the MID or relaxing zoning laws.

Using Panel Tax Data to Examine the Transition to Retirement

Using panel data from the Internal Revenue Service’s Statistics of Income (SOI) Division, we find that most individuals do not experience a reduction in inflation-adjusted spendable income after claiming Social Security. We also examine the composition of income after claiming and find that both Social Security benefits and non-Social Security retirement distributions typically represent substantial shares of income. Examining the five-year period from one year before individuals first receive Social Security retirement benefits to three years after, 81 percent of individuals had income, either directly or through a spouse, from employer retirement plans, annuities, or IRAs; and another 8 percent had a Form 1099-R (indicating a retirement account transaction, such as a rollover, that did not generate income), a Form 5498 (indicating IRA ownership), or both. This study uses the SOI 1999 Edited Panel of individual income tax returns, with information through tax year 2010, supplemented with data from information returns. We structure the data to follow individual taxpayers—specifically, individuals who were the primary or secondary taxpayer on a joint return or the primary taxpayer on a non-joint return in 1999—rather than tax returns. Information returns and various schedules filed with Form 1040 allow us to allocate labor income, Social Security benefits, and retirement income (pension, annuity, and IRA distributions) to primary and secondary filers on joint returns. Information returns also allow us to measure the income of all 1999 taxpayers through 2010 regardless of whether they filed a tax return in a subsequent year or not. We focus on working individuals age 55 to 61 in 1999 who did not receive Social Security benefits in 1999. Comparison with U.S. population counts suggests that nearly all individuals in this category filed a tax return in 1999.

Bridging a Survey Redesign Using Multiple Imputation: An Application to the 2014 CPS ASEC

Abstract The Current Population Survey Annual Social and Economic Supplement (CPS ASEC) serves as the data source for official income, poverty, and inequality statistics in the United States. In 2014, the CPS ASEC questionnaire was redesigned to improve data quality and to reduce misreporting, item nonresponse, and errors resulting from respondent fatigue. The sample was split into two groups, with nearly 70% receiving the traditional instrument and 30% receiving the redesigned instrument. Due to the relatively small redesign sample, analyses of changes in income and poverty between this and future years may lack sufficient power, especially for subgroups. The traditional sample is treated as if the responses were missing for income sources targeted by the redesign, and multiple imputation is used to generate plausible responses. A flexible imputation technique is used to place individuals into strata along two dimensions: 1) their probability of income recipiency and 2) their expected income conditional on recipiency for each income source. By matching on these two dimensions, this approach combines the ideas of propensity score matching and predictive means matching. In this article, this approach is implemented, the matching models are evaluated using diagnostics, and the results are analyzed.

Household Incomes in Tax Data: Using Addresses to Move from Tax Unit to Household Income Distributions

Tax return data are increasingly the standard for tracking income statistics in the United States. However, these data have traditionally been limited by their inability to capture non-filers and to identify members of separate tax units living in the same household. We overcome these obstacles and create household records directly in the tax data using mailing address information included on tax forms. We then present the first set of tax-based household income and inequality measures for the entire income distribution. When comparing household income inequality results in the tax data to those using the March CPS, we confirm previous findings that the March CPS understates the inequality of household income. However, we also find that the previous approach of using tax units in the IRS data to proxy for households leads to an overstatement of household income inequality. Finally, using households in the IRS tax records, we illustrate how focusing on tax units rather than households alters the observed distribution of tax programs such as the Earned Income Tax Credit.

Better Estimates from Binned Income Data: Interpolated CDFs and Mean-Matching.

Researchers often estimate income statistics from summaries that report the number of incomes in bins such as $0 to 10,000, $10,001 to 20,000, …, $200,000+. Some analysts assign incomes to bin midpoints, but this treats income as discrete. Other analysts fit a continuous parametric distribution, but the distribution may not fit well. We fit nonparametric continuous distributions that reproduce the bin counts perfectly by interpolating the cumulative distribution function (CDF). We also show how both midpoints and interpolated CDFs can be constrained to reproduce the mean of income when it is known. We evaluate the methods in estimating the Gini coefficients of all 3,221 U.S. counties. Fitting parametric distributions is very slow. Fitting interpolated CDFs is much faster and slightly more accurate. Both interpolated CDFs and midpoints give dramatically better estimates if constrained to match a known mean. We have implemented interpolated CDFs in the "binsmooth" package for R. We have implemented the midpoint method in the "rpme" command for Stata. Both implementations can be constrained to match a known mean.

Measuring forest and wild product contributions to household welfare: Testing a scalable household survey instrument in Indonesia

Systematic comparisons of human dependence on forests and environmental resources have been challenging, as a result of heterogeneous methodologies. Specialized Forestry Modules have been developed, with the goal of filling current information gaps concerning the economic importance of forest and wild products in household welfare and rural livelihoods. Results from a pilot assessment of the Forestry Modules in West Kalimantan, Indonesia, are presented, showing that the Forestry Modules perform well in extracting the expected information: mean per capita forest and wild product income shifts according to the geographical “forest gradient”. Significantly, in the forest-rich upstream village, mean forest and wild product income and mean forest-related wage and business incomes exceeds current mean agricultural income statistics for West Kalimantan and mean non-agricultural rural household incomes in the lowest bracket. Consumption of forest products and importance as a coping strategy was higher in the most upstream village, where sale of forest products in times of shock was more marked in the most downstream village (where forest coping strategies were also least important). The Forestry Modules' detailed and systematic approach can help ensure that contributions of forest and wild products are not underestimated in national figures.

Redistribution in the age of austerity: evidence from Europe 2006–2013

ABSTRACTWe examine the relationship between changes in a country’s public sector fiscal position on inequality at the top and bottom of the income distribution during the age of austerity from 2006 to 2013. We use a parametric Lorenz curve model and Gini-like indices of inequality as our measures to assess distributional changes. Based on Statistics of Income and Living Conditions (EU-SILC) and IMF data for 12 European countries, we find that more severe adjustments to the cyclically adjusted primary balance (i.e., more austerity) are associated with a more unequal distribution of income driven by rising inequality at the top. The data also weakly suggests a decrease in inequality at the bottom. The distributional impact of austerity measures reflects the reliance on regressive policies and likely produces increased incentives for rent-seeking while reducing incentives for workers to increase productivity.

Piketty, capital and education: a solution to, or problem in, rising social inequalities?

When Piketty’s book Capital in the Twenty-first Century was released in 2014, it became an overnight success. Piketty focused on the concentration of wealth in a tiny social elite, and showed that their wealth had increased following the financial crisis in 2008. Yet the value of Piketty’s book offers something more than this for social scientists concerned with social inequalities. His work on a large data-set of long-run income and wealth statistics illustrates that the assumptions and models which have guided the work of neoclassical economists are flawed, but that societal arrangements matter. Yet despite this insight, Piketty’s solution to the problem of inequality is to argue that ‘… the best way to reduce inequalities with respect to labor … is to invest in education’. In this article I argue that there are major problems with this proposed solution and outline three lacunae that need to be addressed.

How Has Elderly Migration Changed in the Twenty-First Century? What the Data Can-and Cannot-Tell Us.

Interstate elderly migration has strong implications for state tax policies and health care systems, yet little is known about how it has changed in the twenty-first century. Its relative rarity requires a large data set with which to construct reliable measures, and the replacement of the U.S. Census long form (CLF) with the American Community Survey (ACS) has made such updates difficult. Two commonly used alternative migration data sources-the Current Population Survey (CPS) and the Statistics of Income (SOI) program of the Internal Revenue Service (IRS)-suffer serious limitations in studying the migration of any subpopulation, including the elderly. Our study informs migration research in the post-2000 era by identifying methodological differences between data sources and devising strategies for reconciling the CLF and ACS. Our investigation focusing on the elderly suggests that the ACS can generate comparable migration data that reveal a continuation of previously identified geographic patterns as well as changes unique to the 2000s. However, its changed definition of residence and survey timing leaves us unable to construct a comparable national migration rate, suggesting that one must use national trends in the smaller CPS to investigate whether elderly migration has increased or decreased in the twenty-first century.

Treatment of Multivariate Outliers in Incomplete Business Survey Data

The distribution of multivariate quantitative survey data usually is not normal. Skewed and semi-continuous distributions occur often. In addition, missing values and non-response is common. All together this mix of problems makes multivariate outlier detection difficult. Examples of surveys where these problems occur are most business surveys and some household surveys like the Survey for the Statistics of Income and Living Condition (SILC) of the European Union. Several methods for multivariate outlier detection are collected in the R-package modi. This paper gives an overview of modi and its functions for outlier detection and corresponding imputation. The use of the methods is explained with a business survey dataset. The discussion covers pre- and post-processing to deal with skewness and zero-inflation, advantages and disadvantages of the methods and the choice of the parameters.

Economic impact of breast-feeding-associated improvements of childhood cognitive development, based on data from the ALSPAC.

The aim of this study was to assess the economic benefits of improved cognitive development related to being breast-fed. Breast-feeding rates were assessed in the Avon Longitudinal Study of Parents and Children. Educational attainment was assessed at age 16 years with higher attainment defined as gaining five General Certificate of Secondary Education (GCSE) passes at a high grade. The economic benefit of being breast-fed was calculated in a decision model using a child's educational attainment and the corresponding expected value of average income in later life. There was a positive association between being breast-fed and achieving higher educational attainment, which remained significant, after adjustment for possible confounders: being breast-fed <6 months yielded an OR of 1·30 (95 % CI 1·13, 1·51) and for ≥6 months yielded an OR of 1·72 (95 % CI 1·46, 2·05), compared with never breast-fed children. On the basis of UK income statistics, the present value of lifetime gross income was calculated to be £67 500 higher for children achieving 5 high-grade GCSE passes compared with not achieving this. Therefore, the economic benefit of being breast-fed <6 months would be £4208 and that for ≥6 months would be £8799/child. The model shows that the increased educational attainment associated with being breast-fed has a positive economic benefit for society, even from small improvements in breast-feeding rates. Within a total UK birth cohort of 800 000/year an increase by 1 % in breast-feeding rates would be worth >£33·6 million over the working life of the cohort. Therefore, breast-feeding promotion is likely to be highly cost-effective and policymakers should take this into consideration.

Never Mind the Gap: Why we shouldn’t worry about inequality

There remains a debate about the true level of wealth inequality in the UK, but the trends do not conform to the story of unprecendented or spiralling inequality that are frequently implied in the media. Wealth inequality recently widened for the first time in a decade. However, this was primarily due to housing wealth. A strong focus on inequality within nations obscures the fact that global income inequality has been falling. Net wealth inequality figures at a global level give a misleading picture of poverty and inequality. They fail to account for the demographic composition of the global population and imply, for example, that a rich westerner with large debts but few assets would find themselves at the bottom of the global distribution. The overwhelming focus on summary statistics of income or wealth at a given point in time perpetuates two misconceptions – namely, that a distribution can be easily controlled and that the economy is a zero-sum game. In reality, inequality statistics reflect the results of millions of individual interactions, exchanges, endowments and policies. Affecting a distribution of income or wealth inevitably means interferring with some of these trades or interactions.

Modeling, Statistics and Political Circumstances

AbstractThe notion of “economic development” dominates aid policy. A nation’s per capita Gross Domestic Product (gdp) determines whether that country is considered developed or less developed, and the standard measure of any developmental progress isgdpgrowth. This article investigates the evolution of the concept of economic development, as it emerged from a specific combination of modeling, statistics and political circumstances. In this story, Arthur Lewis played a decisive role, but only by building upon Colin Clark’s first global national income statistics, an indispensible foundation for Lewis’s seminal model of economic development. This model was embraced by policy makers longing for a theoretical framework to clarify and operationalize the hitherto vague concept of development. More importantly, however, the statistical indicator on which Lewis based his theory had already been universally accepted. In other words: statistics came before theory. This holds important lessons for alternative development ideas. It explains why the idea of economic development remains so firmly entrenched and suggests the conditions that might be necessary for an alternative theory to take hold.

Communicating Uncertainty in Official Economic Statistics: An Appraisal Fifty Years after Morgenstern

Federal statistical agencies in the United States and analogous agencies elsewhere commonly report official economic statistics as point estimates, without accompanying measures of error. Users of the statistics may incorrectly view them as error free or may incorrectly conjecture error magnitudes. This paper discusses strategies to mitigate misinterpretation of official statistics by communicating uncertainty to the public. Sampling error can be measured using established statistical principles. The challenge is to satisfactorily measure the various forms of nonsampling error. I find it useful to distinguish transitory statistical uncertainty, permanent statistical uncertainty, and conceptual uncertainty. I illustrate how each arises as the Bureau of Economic Analysis periodically revises GDP estimates, the Census Bureau generates household income statistics from surveys with nonresponse, and the Bureau of Labor Statistics seasonally adjusts employment statistics. I anchor my discussion of communication of uncertainty in the contribution of Oskar Morgenstern (1963a), who argued forcefully for agency publication of error estimates for official economic statistics. (JEL B22, C82, E23)