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.
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Data Availability
Social Security and Tax micro-data (both for individuals and firms) are not available since they were provided to Instituto de Economía-Universidad de la República by the uruguayan tax authority Dirección General Impositiva under a non-sharing with third parties agreement. These data may be requested directly to Dirección General Impositiva.
Survey and National Accounts data is publicly available at Instituto Nacional de Estadísticas and Banco Central del Uruguay web-pages, and may be downloaded directly without any specific authorization. Survey data: https://www.ine.gub.uy/encuesta-continua-de-hogares1. National Accounts data: https://www.bcu.gub.uy/Estadisticas-e-Indicadores/Paginas/Cuentas-Nacionales-e-Internacionales.aspxhttps://www.bcu.gub.uy/Estadisticas-e-Indicadores/Paginas/Cuentas-Nacionales-e-Internacionales.aspx.
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Acknowledgements
We are grateful to the inequality research group Instituto de Economía-UdelaR for their inputs and contributions. We would like to especially thank Andrea Vigorito for her insights and suggestions throughout the whole process of writing this article; we also extend our thanks to Martín Leites and Luciana Méndez, coordinators of the group, and to the participants of the seminar in which we presented this article. We are also very grateful to the World Inequality Lab’s team for their continuous help and invaluable comments at different stages of this process: in particular, we would like to thank Facundo Alvaredo, Ignacio Flores, and Marc Morgan. We are also grateful to the participants in the session on “DINA in developing countries” at the First WIL Conference in December 2017, and the participants in the session “Income Distribution” at the IX Conference of the Network of Inequality and Poverty (Uruguayan session, November 2017), who commented on early versions of this paper. We thank Nora Lustig, with whom we discussed in depth many of the key aspects of this effort. Finally, we thank Gustavo González, former coordinator of Asesoría Económica at Dirección General Impositiva, and to his staff, Fernando Peláez and Sol Mascarenhas, for the invaluable help and comments received during this research. Any errors remain our own.
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De Rosa, M., Vilá, J. Beyond tax-survey combination: inequality and the blurry household-firm border. J Econ Inequal 21, 537–572 (2023). https://doi.org/10.1007/s10888-023-09566-w
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DOI: https://doi.org/10.1007/s10888-023-09566-w