DP17135 The Inequality (or the Growth) we Measure: Data Gaps and the Distribution of Incomes

Author(s): Facundo Alvaredo, Mauricio De Rosa, Ignacio Flores Beale, Marc Morgan
Publication Date: March 2022
Keyword(s): Administrative data, data gaps, income distribution, Latin America, National Accounts, Surveys
JEL(s): D3, E01, N36
Programme Areas: Public Economics
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=17135

Large gaps exist between income estimates from inequality studies and macroeconomic statistics, questioning our representation of flows and the relevance of economic growth. We take stock of these gaps by confronting multiple datasets in Latin America, finding that surveys account for around half of macroeconomic income over the past twenty years. Less than half of this gap is due to conceptual differences, the remainder coming from growing measurement issues, which mainly concern capital incomes. Top tails in administrative data and surveys present diverging averages, especially for non-wage incomes, and different shapes. We discuss implications for both inequality levels and trends.