Imputed Rent and Income Distribution

Yates, Judith

doi:10.1111/j.1475-4991.1994.tb00044.x

Cited by 75 publications

(59 citation statements)

References 15 publications

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“…Among other issues, we will address the question of whether inequality decomposition by age (within/between-group inequality) has also changed over time due to the inclusion of CI and IR. At least for IR, this is to be expected from the literature (e.g., Yates 1994). However, the picture for CI may be less clear.…”

Section: Resultssupporting

confidence: 61%

“…However, there is a separate strand of literature focusing on the impact of non-monetary income components on income inequality, not at least in order to improve cross-national comparability of inequality analyses (see Canberra Group 2001). Im-puted rent for owner-occupied housing is the most prominent example (see, e.g., Yates 1994 for Australia, Frick & Grabka 2003 for the USA, UK and Germany) 1 . Typically the net value of imputed rent increases in age due to the nature of the mortgage repayment schemes, thus yielding a decrease in income inequality and especially in relative income poverty among the elderly, and providing an effective means of old-age provision.…”

Section: Motivationmentioning

confidence: 99%

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Accounting for Imputed and Capital Income Flows in Income Inequality Analyses

Frick

Grabka

2009

SSRN Journal

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. This series presents research findings based either directly on data from the German SocioEconomic Panel Study (SOEP) or using SOEP data as part of an internationally comparable data set (e.g. CNEF, ECHP, LIS, LWS, CHER/PACO). SOEP is a truly multidisciplinary household panel study covering a wide range of social and behavioral sciences: economics, sociology, psychology, survey methodology, econometrics and applied statistics, educational science, political science, public health, behavioral genetics, demography, geography, and sport science. Terms of use: Documents inThe decision to publish a submission in SOEPpapers is made by a board of editors chosen by the DIW Berlin to represent the wide range of disciplines covered by SOEP. There is no external referee process and papers are either accepted or rejected without revision. Papers appear in this series as works in progress and may also appear elsewhere. They often represent preliminary studies and are circulated to encourage discussion. Citation of such a paper should account for its provisional character. A revised version may be requested from the author directly.Any opinions expressed in this series are those of the author(s) and not those of DIW Berlin.Research disseminated by DIW Berlin may include views on public policy issues, but the institute itself takes no institutional policy positions. Abstract:Using representative and consistent microdata from the German Socio-Economic Panel Study (SOEP) from 1985-2007, we illustrate that capital income (CI = return on financial investments) and imputed rent (IR = return on investments in owner-occupied housing) have become increasingly important sources of economic inequality in Germany over the last two decades. Whereas the operationalization of CI in this paper is based on monetary returns on financial investments only, our definition of IR follows a regulation by the European Commission, (EC) which is currently being used to harmonize income measurement for the European Statistics on Income and Living Conditions (EU-SILC) in Europe. While both of these components represent some kind of return on alternative private investments, our results indicate that they do not coincide in their impacts on income inequality and poverty. In line with the literature, net IR as defined according to the EC regulation tends to exert a dampening effect on inequality and relative poverty, very much driven by the increasing share of outright ownership among the elderly. ...

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Section: Resultssupporting

confidence: 61%

Section: Motivationmentioning

confidence: 99%

Accounting for Imputed and Capital Income Flows in Income Inequality Analyses

Frick

Grabka

2009

SSRN Journal

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“…Likewise, Meulemans and Cantillon (1993) report declining income inequality in Belgium. Yates (1994) finds slightly declining income inequality in Australia. Buckley and Gurenko (1997) study the income distribution of Soviet Russia and find that the progressive impact of housing income provided a cushion against the consequences of transition, where the 'state' walked away from collective housing and the tenants were left to govern (see also Bailey, Smeeding and Torrey, 1999).…”

Section: Motivationmentioning

confidence: 98%

Distributional effects of imputed rents in five European countries

Frick

Grabka

Smeeding

et al. 2010

Journal of Housing Economics

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Most empirical distributional studies of well-being in developed countries rely on distributions of disposable income. From a theoretical point of view this practice is contentious since a household's command over resources is determined not only by its spending power over commodities it can buy in the market but also on resources available to the household members through non-market mechanisms such as the in-kind provisions of the welfare state and the value of private non-cash incomes. In developed market economies the most important private non-cash income component is imputed rent from owneroccupied or subsidized accommodation. Employing a wider definition of imputed rent that also allows the analyst to capture income advantages among tenants living in rentsubsidized accommodations of various sorts (including rent-free or reduced-rent households), the present paper examines the differential effects of including imputed rents in the concept of resources in five European countries (Belgium, Germany, Greece, Italy and the UK). The results suggest that in almost all cases, the inclusion of imputed rents in the concept of resources leads to a decline in measured levels of inequality and poverty. The main beneficiaries are outright homeowners and households living in rent-free (or heavily subsidised) accommodation -most often older persons. The inclusion of imputed rents in the concept of resources does not lead to substantial changes in the ranking of the countries according to their level of inequality, despite widespread differences in the rates of home ownership and subsidization across the countries studied here. Terms of use: Documents in2

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“…In this sense, our work is related to the literature assessing the impact of imputed rents on income distribution (e.g., Bourassa andHendershott, 1994, andYates, 1994, for Australia; Yagi and Tachibanaki, 1998, for Japan;Frick and Grabka, 2003, suggest that the current tax system is both inefficient and inequitable. In particular, by including imputed rent from owner-occupied dwellings as a component of the Personal…”

Section: Introductionmentioning

confidence: 99%

Assessing the Distributional Effects of Housing Taxation in Italy: a Microsimulation Approach

Pellegrino¹,

Piacenza²,

Turati³

2012

CESifo Economic Studies

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Abstract. The presence of extensive housing subsidies characterises the current Italian tax systems as inefficient. In this paper, we study whether inefficiency is the price to be paid to improve equity, by assessing the distributive impact of housing taxation on households wellbeing. We concentrate on the Personal Income Tax (PIT) on the main residence, and compare current provisions of the Tax Code with alternative approaches, which consider the imputed rent (IR) from owner-occupied dwelling, and would make the tax system neutral with respect to the allocation of wealth among different assets. Holding revenues constant at the current level, we assess the distributional consequences of the IR approach under several alternative scenarios. Our results suggest that the current tax system is just as inefficient as it is inequitable. In particular, by including IR from owner-occupied dwellings as a component of the PIT gross income, we find that overall inequality is reducing, while contemporaneously increasing efficiency in the allocation of wealth. Moreover, considering changes in tax liabilities for individual taxpayers, we show that taxing imputed rents will favour the young and penalise the elderly. JEL Codes: H24, D31

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Imputed Rent and Income Distribution

Cited by 75 publications

References 15 publications

Accounting for Imputed and Capital Income Flows in Income Inequality Analyses

Accounting for Imputed and Capital Income Flows in Income Inequality Analyses

Distributional effects of imputed rents in five European countries

Assessing the Distributional Effects of Housing Taxation in Italy: a Microsimulation Approach

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