Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/228343
Authors: 
Hlasny, Vladimír
Ceriani, Lidia
Verme, Paolo
Year of Publication: 
2020
Series/Report no.: 
LIS Working Paper Series No. 792
Abstract: 
Incomes in surveys suffer from various measurement problems, most notably in the tails of their distributions. We study the prevalence of negative and zero incomes, and their implications for inequality and poverty measurement relying on 57 harmonized surveys covering 12 countries over the period 1995-2016. The paper explains the composition and sources of negative and zero incomes and assesses the distributional impacts of alternative correction methods on poverty and inequality measures. It finds that the main source of negative disposable incomes is negative self-employment income, and that high tax, social security withholdings and high self-paid social-security contributions account for negative incomes in some countries. Using detailed information on expenditure, we conclude that households with negative incomes are typically as well off as, or even better, than other households in terms of material wellbeing. By contrast, zero-income households are found to be materially deprived. Adjusting poverty and inequality measures for these findings can alter these measures significantly.
Subjects: 
bottom incomes
income inequality
poverty
selfemployment
Mediterranean
Middle East
Pareto
random forest
JEL: 
D31
I32
N35
Document Type: 
Working Paper

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