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Beyond tax-survey combination: inequality and the blurry household-firm border

Author

Listed:
  • Mauricio De Rosa

    (Universidad de la República
    Paris School of Economics)

  • Joan Vilá

    (Universidad de la República)

Abstract
Inequality evidence based on surveys, tax records, or their combination often result in divergent trends, fueling the distributional debate in Latin America. Beyond the strengths and weaknesses of these sources and their combination, tax-survey data face two shortcomings: they are unable to account for aggregate household or national income, and they are affected by firm owners’ decisions about the distribution of profits, changing which incomes researchers can actually observe. We combine social security data, household surveys and matched personal and firm tax records, which allows us to accurately account for all income sources, particularly capital incomes at the firm and individual level. Based on these unique data, we assess inequality trends in Uruguay, showing that increasing profit-distribution by firms pushes tax-survey top shares upwards, but that this trend is offset when undistributed profits are accounted for. These results call for caution when using tax-survey data without considering changes in profit-distribution.

Suggested Citation

  • Mauricio De Rosa & Joan Vilá, 2023. "Beyond tax-survey combination: inequality and the blurry household-firm border," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 21(3), pages 537-572, September.
    • Handle: RePEc:spr:joecin:v:21:y:2023:i:3:d:10.1007_s10888-023-09566-w
    DOI: 10.1007/s10888-023-09566-w
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    References listed on IDEAS

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    More about this item

    Keywords

    Firms; Income inequality; National accounts; Latin America; Tax records;
    All these keywords.

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • D33 - Microeconomics - - Distribution - - - Factor Income Distribution
    • E01 - Macroeconomics and Monetary Economics - - General - - - Measurement and Data on National Income and Product Accounts and Wealth; Environmental Accounts

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