Recent Development in Income Inequality in Thailand

Transcription

1 Recent Development in Income Inequality in Thailand V.Vanitcharearnthum Chulalongkorn Business School September 21, 2015 V.Vanitcharearnthum (CBS) Income Inequality Sep. 21, / 40

2 Introduction Agenda Income inequality: measurement Literature Review Pareto Distribution Top income share Evidences from SES Evidences from tax return V.Vanitcharearnthum (CBS) Income Inequality Sep. 21, / 40

3 Introduction Agenda Declining Poverty (millions) Figure : Number of poor at $2/day (PPP) V.Vanitcharearnthum (CBS) Income Inequality Sep. 21, / 40

4 Introduction Agenda Improving Equality Figure : Gini Coefficient: Whole Kingdom V.Vanitcharearnthum (CBS) Income Inequality Sep. 21, / 40

5 Introduction Agenda.54 Bangkok Northeast North Central Figure : Gini Coefficients: By Regions V.Vanitcharearnthum (CBS) Income Inequality Sep. 21, / 40

6 Literature Review Thailand Recent Studies Kobsak (2013) Kilenthong (2014) V.Vanitcharearnthum (CBS) Income Inequality Sep. 21, / 40

7 Literature Review International Evidences Review Literature Feenberg and Poterba (NBER 19) Piketty(JPE 2003) Atkinson (2005) Piketty and Saez (QJE 2003) Atkinson, Piketty and Saez (JEL 2011) V.Vanitcharearnthum (CBS) Income Inequality Sep. 21, / 40

8 Methodology Pareto Distribution Methodology Pareto distribution SES: HH member data Estimating Pareto parameters Tax units amd national income Preliminary result V.Vanitcharearnthum (CBS) Income Inequality Sep. 21, / 40

9 Methodology Pareto Distribution Pareto(1896, 1897) Vilfrado Pareto considered data for England, a number of Italian cities, several German states, Paris and Peru. Plotting the cumulative distributions of income for these countries on double logarithmic paper, Pareto claimed that in each case the result was a straight line with about the same slope. V.Vanitcharearnthum (CBS) Income Inequality Sep. 21, / 40

10 Methodology Pareto Distribution log N = A α log y log N y k England Italian Towns k log y Figure : Pareto s Law V.Vanitcharearnthum (CBS) Income Inequality Sep. 21, / 40

11 Methodology Pareto Distribution log N = A α H log y log N y k k log y Figure : Pareto s Law V.Vanitcharearnthum (CBS) Income Inequality Sep. 21, / 40

12 Methodology Pareto Distribution log N = A α L log y log N y k k log y Figure : Pareto s Law V.Vanitcharearnthum (CBS) Income Inequality April 9, / 40

13 Methodology Pareto Distribution The Pareto law for top incomes is given by the following cumulative distribution function, F (y), that specifies the probability that a randomly chosen taxpayer s income y is greater than x is ( ) k α Pr(y > x) = 1 F (x) = x where k is the minimum income that the Pareto distribution applies to, and α is the exponent that determines the shape of the distribution. V.Vanitcharearnthum (CBS) Income Inequality Sep. 21, / 40

14 Methodology Pareto Distribution β Let y (y) be an average income of individuals with income above y. Under the Pareto distribution, where β = α α 1 y (y) = β y V.Vanitcharearnthum (CBS) Income Inequality Sep. 21, / 40

15 Methodology Pareto Distribution If β = 2, the average income of individuals with income above 1,000,000 bahts is 2,000,000 bahts. A higher β means a fatter upper tail of the distribution V.Vanitcharearnthum (CBS) Income Inequality Sep. 21, / 40

16 Part I HH Survey V.Vanitcharearnthum (CBS) Income Inequality Sep. 21, / 40

17 SES Results SES 2004 Use HH member data: in rec 2 (including info about education, work status, etc.) Also rec (income from various occupations) In 2004 survey, there are Wage income Non-farm income Farm income Property income Transfers Other income V.Vanitcharearnthum (CBS) Income Inequality Sep. 21, / 40

18 SES Results SES 2009 & 2013 Total income of HH member includes Wage income Revenue and operating cost of business Money received from agriculture and cost V.Vanitcharearnthum (CBS) Income Inequality Sep. 21, / 40

19 SES Results k.2, , ,984 α β y (y p90 ) 313, , ,681 y p99 493, , ,977.1 y p99.9 2,011, ,679, ,502,026.2 V.Vanitcharearnthum (CBS) Income Inequality Sep. 21, / 40

20 SES Results Top income share Top 1% Top.1% V.Vanitcharearnthum (CBS) Income Inequality Sep. 21, / 40

21 SES Results Fraction of BA or Above in Top income Top 1 % Top.1 % V.Vanitcharearnthum (CBS) Income Inequality Sep. 21, / 40

22 SES Results 2004:Top 1 % Decomposition Wage 36.7 % 1.8 % 7.9 % 41.8 % 2.6 % Nonfarm 9.1 % Other Transfer Property Farm V.Vanitcharearnthum (CBS) Income Inequality Sep. 21, / 40

23 SES Results 2009:Top 1 % Decomposition Wage 36.5 % 52.3 % % 1.12 % Other Business profit Agriculture profit V.Vanitcharearnthum (CBS) Income Inequality Sep. 21, / 40

24 SES Results 2013:Top 1 % Decomposition Wage 68.8 % 0.55 % % Business profit Agriculture profit V.Vanitcharearnthum (CBS) Income Inequality Sep. 21, / 40

25 SES Results Sectors in Top 1% V.Vanitcharearnthum (CBS) Income Inequality Sep. 21, / 40

26 SES Results Sectors in Top.1% V.Vanitcharearnthum (CBS) Income Inequality Sep. 21, / 40

27 SES Results Highest Income 33,666,640 17,123,600 Region Central South Education Gen Ed BA Industry Wholesale and retail, Growing of oleaginous fruits repairing motor vehicles motorcycles/hh goods V.Vanitcharearnthum (CBS) Income Inequality Sep. 21, / 40

28 Part II Tax Returns Data V.Vanitcharearnthum (CBS) Income Inequality Sep. 21, / 40

29 Estimation Results α α V.Vanitcharearnthum (CBS) Income Inequality Sep. 21, / 40

30 Estimation Results β β V.Vanitcharearnthum (CBS) Income Inequality Sep. 21, / 40

31 Estimation Results Threshold Income Top 1% Top 0.1% ,152, ,228, ,115, ,706, ,314, ,772, ,301, ,367, ,340, ,644, ,341, ,717,556.8 V.Vanitcharearnthum (CBS) Income Inequality Sep. 21, / 40

32 Top Income Shares Let y x% be the threshold income at the xth percentile. Under Pareto distribution, we know that the average income above y x% is y (y x% ) = β y x% We computed y (y 1% ) and y (y.1% ) V.Vanitcharearnthum (CBS) Income Inequality Sep. 21, / 40

33 Top Income Shares y (y x% ) Top 1% Top.1% ,690,541 35,702, ,943,201 47,958, ,759,486 34,050, ,266,004 29,803, ,496,295 31,349, ,587,824 32,152,211 V.Vanitcharearnthum (CBS) Income Inequality Sep. 21, / 40

34 Top Income Shares 2 Methods Tax Base (I) Use 1% and 0.1% of tax filers to multiply with y (y x% ) in order to get the total income in the top 1% and.1% bracket Then divide those numbers by the net national income in the corresponding year V.Vanitcharearnthum (CBS) Income Inequality Sep. 21, / 40

35 Top Income Shares 2 Methods Top 1 % Top.1% V.Vanitcharearnthum (CBS) Income Inequality Sep. 21, / 40

36 Top Income Shares 2 Methods Tax base (II) We followed Piketty and Saez (2003) by using tax units instead of tax filers V.Vanitcharearnthum (CBS) Income Inequality Sep. 21, / 40

37 Top Income Shares 2 Methods Top 1 % Top.1% V.Vanitcharearnthum (CBS) Income Inequality Sep. 21, / 40