Top Incomes in Ireland: Reconciling Evidence from Tax Records and Household Survey Data

Abstract

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Top Income Adjustments and Inequality: An Investigation of the EU‐SILC†

“…The latter reflects heterogeneous response rates, for example when those at the top of the distribution decline to respond to the survey, after being included in the sample, more than those among the rest of the distribution. As a result of these problems, the gap between surveys and other more reliable sources of data is particularly large at the top (see, e.g., Burkhauser et al (2017) for the UK, Blanchet et al (2019) for France, the UK, Norway, Brazil and Chile, or Lustig (2019) for Uruguay) and it has been growing over time for countries like Ireland (Callan et al, 2020) or the United States (Yonzan et al, 2020).…”

“…(2018a) for the UK, Blanchet et al . (2022) for France, the UK, Norway, Brazil, and Chile, or Lustig (2019) for Uruguay) and it has been growing over time for countries like Ireland (Callan et al ., 2020) and the US (Yonzan et al ., 2020). Administrative data like income tax records are not without their own limits.…”

“…We explore the reweighted data set in more depth, including its distribution across the population, as well as the impact of different units of observation and income concepts, two factors that Callan et al . (2020) showed to be crucial in explaining the differences in inequality trends in Ireland. We also compare the results we find with those of other recent studies attempting to adjust inequality measures from the EU‐SILC, namely Hlasny and Verme (2018) and Bartels and Metzing (2019), to assess whether the choice of adjustment method really makes a difference.…”

“…We use the micro-level adjustments they produce for 26 countries covered by the European Union Statistics on Income and Living Conditions (EU-SILC) between 2003 and 2017 to construct inequality indicators of equivalised gross and disposable household income among persons, the concepts most commonly employed for the analysis and tracking of income inequality. We explore the reweighted dataset in more depth, including its distribution across the population, as well as the impact of different units of observation and income concepts, two factors that Callan et al (2020) showed to be crucial in explaining the differences in inequality trends in Ireland. We also compare the results we find with those of other recent studies attempting to 'adjust' such inequality measures from the EU-SILC, namely Hlasny and Verme (2018) and Bartels and Metzing (2019), to assess assessed whether the choice of adjustment method really makes a difference.…”

https://www.esri.ie/publications/poverty-income-inequality-and-living-standards-in-ireland-third-annual-report

“…Finally, as with any household survey, there is likely incomplete coverage of the very top of the income distribution by the household surveys we utilise due to nonresponse and undersampling (Atkinson et al, 2011;Callan et al, 2021). In addition, like in many countries, neither SILC nor its predecessors collect information on realised or unrealised capital gains which are more prevalent towards the top of the income distribution, not least because of their preferable tax treatment relative to employment or dividend income (Björklund and Waldenström, 2021;Kakoulidou and Roantree, 2021).…”