Abstract

False negatives? Earnings underreporting, tax overreporting in surveys worldwide
Vladimir Hlasny (UN Economic and Social Commission for Western Asia and Prague University of Economics and Business)

Household survey incomes are subject to misreporting and measurement issues biasing the static and dynamic assessment of inequality and poverty. Non-positive incomes are particularly problematic as they represent extreme statistics in income distributions, are incompatible with sustainable consumption streams, and cannot be squared with households’ observed behaviors and other socio-economic outcomes. We find that, in high income countries, the main source of extremely low disposable incomes is unduly high reported tax and social security withholdings. In transitional economies between the upper-middle and high income status, the main sources are negative self-employment income, followed by negative capital income and high tax liabilities. Lower down, among middle and low income countries, negative self-employment incomes play a leading role. Hence, ‘tax overreporting’ may explain low incomes in high income countries, while ‘earnings underreporting’ may play a greater role in upper-middle and lower income countries. Underestimation of rental values among homeowners is one specific challenge. Households with negative incomes appear to be typically as well off as, or better off than other households in terms of material wellbeing, both according to the short-term and long-term indicators. By contrast, zero-income households appear to be materially poor. We surmise that zero or small negative incomes correspond predominantly to chronically deprived households who temporarily fall into material poverty, while large negatives correspond to chronically well-off households under-reporting earnings, or writing off capital losses or tax assessments from prior years.

Nativity wealth gaps across countries 
Davide Gritti (University of Trento)

This study proposes a novel comparative analysis of wealth disparities between native and migrant populations (aka nativity or migrant wealth gaps), employing the Luxembourg Wealth Study. Existing country comparisons suffer from outdatedness, limited inclusion of nations, or focus on selected demographic groups. Furthermore, while prior research has predominantly examined individual-level determinants, this project aims to add the role of institutional factors. Specifically, it will assess the impact of country-level housing characteristics on migrant wealth integration, given the pivotality of housing for wealth inequality. Within countries, unconditional quantile regressions are used to untangle the influence of demographic and labor-market differences between native and migrant populations on nativity wealth gaps. Between countries, the correlation of nativity wealth gaps and characteristics of housing systems is explored.

This seminar is part of the (LIS)2ER Initiative.