Bottom incomes and the measurement of poverty and inequality

Arbeitspapier

Incomes in surveys suffer from various measurement problems, most notably in the tails of their distributions. We study the prevalence of negative and zero incomes, and their implications for inequality and poverty measurement relying on 57 harmonized surveys covering 12 countries over the period 1995-2016. The paper explains the composition and sources of negative and zero incomes and assesses the distributional impacts of alternative correction methods on poverty and inequality measures. It finds that the main source of negative disposable incomes is negative self-employment income, and that high tax, social security withholdings and high self-paid social-security contributions account for negative incomes in some countries. Using detailed information on expenditure, we conclude that households with negative incomes are typically as well off as, or even better, than other households in terms of material wellbeing. By contrast, zero-income households are found to be materially deprived. Adjusting poverty and inequality measures for these findings can alter these measures significantly.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: LIS Working Paper Series ; No. 792

Classification and Topics

• Classification: Wirtschaft ; Personal Income, Wealth, and Their Distributions ; Measurement and Analysis of Poverty ; Economic History: Labor and Consumers, Demography, Education, Health, Welfare, Income, Wealth, Religion, and Philanthropy: Asia including Middle East
• Subject: bottom incomes ; income inequality ; poverty ; selfemployment ; Mediterranean ; Middle East ; Pareto ; random forest

Contributors, Location and Time

• Event: Geistige Schöpfung
• (who): Hlasny, Vladimír ; Ceriani, Lidia ; Verme, Paolo
• Event: Veröffentlichung
• (who): Luxembourg Income Study (LIS)
• (where): Luxembourg
• (when): 2020

Further information

• Handle: http://hdl.handle.net/10419/228343
• Last update: 20.09.2024, 8:21 AM CEST