Capturing top incomes and measuring inequality in Europe

Abstract:

The problem of the ‘missing top’ in household income surveys has been highlighted by tax-based estimates of top income shares. This column shows that tax-based top income adjustments to EU Statistics on Income and Social Conditions surveys often make a substantial difference, but to an extent that varies widely across European countries and over time. Incorporating data from administrative sources in the surveys themselves helps to reduce the need for post-survey adjustment but may not eliminate it, and the nature of the country’s tax system and data are highly relevant for how best to combine data from both sources.