The Unassuming Economist

From a new VOX post:

“Despite the growing importance of inequalities in policy debates, it is still difficult to compare inequality levels across European countries and to tell how European growth has been shared across income groups. This column draws on new evidence combining surveys, tax data, and national accounts to document a rise in income inequality in most European countries between 1980 and 2017. It finds that income disparities on the old continent have increased less than in the US and shows that this is essentially due to ‘predistribution’ policies.”

“Figure 1 shows how bringing together surveys, tax data, and national accounts can greatly improve traditional survey-based estimates. In Poland, fiscal (pre-tax) top income shares obtained from Bukowski and Novokmet (2017) reveal a large and growing underrepresentation of top incomes in surveys. After correction, the top 10% pre-tax income share appears to be underestimated by more than 10 percentage points in 2017. By contrast, surveys are more efficient at measuring top incomes in Denmark, but accounting for the large share of undistributed profits accruing to resident households (more than 8% of GDP in recent years) leads to important upward revisions of inequality at the top end.”