Distributional National Accounts DINA

Transcription

1 Distributional National Accounts DINA Facundo Alvaredo Anthony B. Atkinson Thomas Piketty Emmanuel Saez Gabriel Zucman Meeting of Providers of OECD IDD Data OECD, Paris, February 18-19, 2016

2 Envision a realistic plan and timetable for harmonized, annual, global distributional national accounts It will probably take a long time before we are able to develop official, consensual DINAs. For many years decades to come, inequality statistics will still be produced by various groups (academics, statistics institutes ). It took a long time ( s) before scholars could hand over the computation of NI and GDP to official institutes. It took a long time ( s) before national accounts were able to standardize stocks accounts (first consistent balance sheets in Germany released in 2010); still many missing countries. In the WTID/WID series, despite efforts, the units of observation, the income concepts and the Pareto interpolation techniques were never made fully homogeneous over time and across countries. In the WTID/WID series, attention is restricted to the top decile income share, rather than the entire distribution.

3 Overall DINA agenda: Producing annual estimates of the distribution of income and wealth using concepts of income and wealth that are consistent with the national accounts. Producing synthetic micro-files on an annual basis (income, wealth, age, gender, savings) DINA and associated micro-files expected to be as consistent as possible across time, countries, income and wealth definitions, and cover the whole distribution (and not only the top). DINA as a new tool to connect inequality and macro Defining a clear common conceptual framework Incorporating results from economic theory Developing statistics techniques to fruitfully use information from all available micro sources Estimating income/wealth growth rates for tiny groups of the distrib.

4 W2ID Working Paper Distributional National Accounts (DINA) Guidelines: Concepts and Methods used in the W2ID * Facundo Alvaredo, Anthony B. Atkinson, Thomas Piketty, Emmanuel Saez, Gabriel Zucman This version: September 2 nd, 2015 (Preliminary and incomplete) Section 1. Introduction Section 2. Units of observation Section 3. Income concepts Section 4. Wealth concepts Section 5. Basic imputation methods US: Piketty, Saez, Zucman France: Garbinti, Goupille, Piketty UK: Alvaredo, Atkinson Section 6. Reconciling wealth inequality sources Section 7. Synthetic micro-files Section 8. Countries/years with limited data Section 9. Concluding comments References

5 Benchmark unit of observation: the adult 20+ individual In joint taxation countries we assume a 50-50% split Whenever possible: also equal-split inequality (full redistribution of resources between spouses) Intermediate splitting hypothesis possible Dependent children taken into account for the relevant cash and in-kind transfers Geographical scope: world/country/states Synthetic micro-files: can be aggregated from country to world and regional level with the appropriate population weights Dimensions: income, wealth, age, gender, saving

6 Four income concepts Personal factor income Personal factor income, which for simplicity we generally refer to as "factor income", and which could also be labeled "personal primary income", or "personal market income", is equal to the sum of all pretax personal income flows accruing directly or indirectly to the individual owners of the production factors, labor and capital, before taking into account the operation of the tax/transfer system, and before taking into account the operation of the pension system. Personal pre tax income (difficulty contribution-based social insurance and non-contribution based social assistance) Personal pretax income, which for simplicity we generally refer to as "pretax income", is equal to the sum of all pretax personal income flows accruing to the individual owners of the production factors, labor and capital, before taking into account the operation of the tax/transfer system, but after taking into account the operation of the pension system.

7 Personal disposable income Disposable income, which could also be labeled "personal disposable income", is equal to the sum of all income flows accruing to individuals, after taking into account the operation of the tax and transfer system. Personal fiscal income Definition close to that of the tax law and to what people have in mind when thinking about their personal income. Also, definition close to the income control in the WTID/WID.

8 Table 3. Personal factor income (DINA) Personal factor income = % = Net national income of Total economy (B5n, S1) % - Property income (D4) received by General government Sector (S13) % + Property income (D4) paid by General government Sector (S13) 42 3% - Property income (D4) received by NPSIH (non-profit) Sector (S15) - 7 0% + Property income (D4) paid by NPSIH (non-profit) Sector (S15) 6 0% Personal factor income = % = Primary income of Household Sector (B5n, S14) % + Primary income of Corporations Sector (B5n, S11+S12) 112 7% + Taxes on production (net) (D2-D3) received by General govt. Sector (S13) % Personal factor income = % = Factor labor income % + Factor capital income % Personal factor labor income = % = Compensation of employees (D1) received by Household Sector (S1) % + Labor share (70%) of net mixed income (B3n + net D45, S14) 33 2% + Imputed Taxes on production (net) (in proportion to income) 154 9% Factor capital income = % = Capital share (30%) of net mixed income (B3n + net D45, S14) 14 1% + Net operating surplus (housing rents) of Household Sector (B2n, S14) 69 4% + Property income (D4 except D45) received by Household Sector (S14) 102 6% - Property income (D4 except D45) paid by Household Sector (S14) % + Undistributed profits (Primary income of Corporations (B5n, S11+S12)) 112 7% + Imputed Taxes on production (net) (in proportion to income) 37 2%

9 Table 4. Personal pretax income (DINA) Net national income of Total economy (B5n, S1) % Personal pretax income (pension-based definition) = % = Factor Income % - Pension contributions (D6111+D6121+D6131+D6141, S14) % - Investment income payable to pension entitlements (D442, S14) - 8 0% + Pension benefits (D6211+D6221, S14) % Personal pretax income (broad definition) = % = Factor income % - Net social contributions (employer and households) (D61, S14) % - Investment income payable to pension entitlements (D442, S14) - 8 0% + Social insurance benefits (D621+D622, S14) % Personal pretax income (broad definition) = % = Pretax labor income % + Pretax capital income % Pretax labor income = % = Factor labor income % - Net social contributions (employer and households) (D61, S14) % + Social insurance income (labor share) (in proportion to contributions) % Pretax capital income = = Factor capital income % - Investment income payable to pension entitlements (D442, S14) - 8 0% + Social insurance income (capital share) (in proportion to contributions) 8 0% Social insurance benefits (D621+D622, S14) % = Social security benefits in cash (D621, S14) 53 3% + Other social insurance benefits (D622, S14) %

10 Table 5. Disposable income (DINA) Nt Net national income of Total Ttl economy (B5n, S1) % Disposable income (cash income) = % = Pretax Income (simplified definition) % - Taxes on production (net) (D2-D3) received by General govt. Sector (S13) % - Current taxes on income and wealth (D5) received by General govt. (S13) % + Social assistance benefits in cash (D623, S14) 52 3% Disposable income (cash income + in-kind transfers) = % = Pretax Income (simplified definition) % - Taxes on production (net) (D2-D3) received by General govt. Sector (S13) % - Current taxes on income and wealth (D5) received by General govt. (S13) % + Social assistance benefits in cash (D623, S14) 52 3% + Social transfers in kind (D63, S14) % Disposable income (cash income + in-kind transfers + collective expenditure) = % = Pretax Income (simplified definition) % - Taxes on production (net) (D2-D3) received by General govt. Sector (S13) % - Current taxes on income and wealth (D5) received by General govt. (S13) % + Social assistance benefits in cash (D623, S14) 52 3% + Social transfers in kind (D63, S14) % + Collective consumption expenditure (P32, S13+S15) %

11 Basic imputations methods High quality administrative micro-data and combination with surveys Upscale incomes to the three income concepts Pragmatic but clear and explicit imputations (proportional upgrading, use of other available information, use legal information) Use of income and wealth surveys Synthetic micro-files Distribution according to the four income concepts Univariate (no information on joint distributions) Joint distribution o Simple functional form for the copula distribution G(yl,yk) such as the bivariate Pareto (Atkinson et al.)

12 Avrage income or capital by age (% average 18+) 180% 170% 160% 150% 140% 130% 120% 110% 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Figure 1. Age-income and age-wealth profiles (France DINA 2006) Total factor income Factor labor income Factor capital income Capital (private wealth)

13 Avrage income or capital by age (% average 21+) 180% 170% 160% 150% 140% 130% 120% 110% 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Figure 2. Age-income and age-wealth profiles (DINA 2006) Pretax Labor income Pretax Total income Pretax Capital income Capital

14 Table E2. Detailed income distribution table (template table based upon data from France 2010) Percentile p Number of adult individuals 20-yr-+ in percentile Percentiles of factor income Lower factor income threshold Average factor income Percentiles of pretax income Lower pretax income threshold Average pretax income Percentiles of disposable income Lower disposable income threshold Average disposable income Percentiles of net wealth Lower net wealth threshold Average net wealth Total pop

15 Most capital income is missed by tax data 35% 30% From tax-reported to total capital income Retained earnings % of factor-price national income 25% 20% 15% 10% Non-filers & unreported sole prop. profits 2/3 missed by tax data Corporate income tax Imputed rents Income paid to pensions & insurance 5% Didivends, interest, rents & profits reported on tax returns 0%

16 Agrowingfractionoflaborincomeis missed by tax data % of total NIPA compensation of employees 100% 95% 90% 85% 80% 75% 70% 65% 60% 55% From taxable to total employee compensation Employer payroll taxes Other 1/4 missed Pension by tax contributions data Reported taxable wages Health benefits 50%

17 How we allocate taxes We follow standard tax incidence results: Labor taxes fall on labor; capital taxes on capital (and corporate tax on all capital assets: Harberger 1962) Reasonable if Y = F (K, L) haselasticityofsubstitution >> labor supply elasticity e L and capital supply elasticity e K Cross-country and time-series evolution of = rk/y and = K/Y broadly consistent with view that > 1ande L and e K relatively small in the long run e K But this is uncertain! will revisit if needed

18 How we construct micro-measures of capital income matching macro totals 1. Construct micro-measures of wealth Follow Saez and Zucman 2014: category by category, pragmatic approach Delivers micro-measures of family wealth matching macro totals Split capital 50/50 among spouses 2. Derive micro-measures of pre-tax capital income Compute aggregate pre-tax rates of return for each asset class that reconcile NIPA income flows with Flow of Funds wealth Apply these rates of return to individual assets

19 How we construct distributional estimates of national labor income 1. Start from reported wages; split income of spouses using W2 forms 2. Employer payroll taxes: apply schedule, e.g., in 2015: Medicare: 1.45% Social Security: 7.2% capped at $118,500 Unemployment insurance: vary by state 3. Pension and health insurance contributions: Available on W2 forms since 1999 for pensions, since 2012 for health

20 National income is more concentrated than tax income 55% Top 10% pre-tax income shares 50% % of total income 45% 40% 35% National income per adult (DINA) 30% 25% IRS family market income (Piketty-Saez) This figure displays the share of total pre-tax national income earned by top 10% adult income earners and the share of total IRS market income earned by top 10% family tax units. Source: Appendix Tables XX

21 Less true for top 1% 25% 20% Share of national income earned by top 1% adult income earners National income per adult (DINA) % of total income 15% 10% 5% IRS family market income (Piketty-Saez) 0% This figure displays the share of total pre-tax national income earned by top 1% adult income earners and the share of total IRS market income earned by top 1% tax units. Source: Appendix Tables XX

22 DINAs make it possible to compute growth rates consistent with macro totals 70,000 Real average national income: Full adult population vs. bottom 90% Average income in constant 2012 dollars 60,000 50,000 40,000 30,000 20,000 10, % 2.0% All adults 1.4% Bottom 90% adults 0.7% Real values are obtained by using the national income deflator and expressed in 2012 dollars. Source: Appendix Tables XX

23 The top 10% has grown three times faster than the bottom 90% since ,000 Real average national income of bottom 90% and top 10% adults 70,000 Top 10% real average national income 300, , , , ,000 50,000 0 Top 10% (left axis) 1.9% 2.0% 2.3% 0.7% Bottom 90% (right axis) 60,000 50,000 40,000 30,000 20,000 10, Bottom 90% real average national income Real values are obtained by using the national income deflator and expressed in 2012 dollars. Source: Appendix Tables XX.