Ex Extreme and and Persis istent In Ineq equality ty: : Ne - - PowerPoint PPT Presentation
Ex Extreme and and Persis istent In Ineq equality ty: : Ne New Evidence for Br Brazil Co Combining National Acc Na Accounts, , Sur Survey eys and and Fis iscal al Data, a, 2001-2015 2015 Marc Morgan Paris School of Economics
First WID.world Conference Paris School of Economics | 14-15 December, 2017
Paris School of Economics & EHESS World Inequality Lab & WID.world Fellow
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Notes: The figure shows the evolution of national income per adult (aged 20+). IBGE and WID.world.
R$ 24,000 R$ 26,000 R$ 28,000 R$ 30,000 R$ 32,000 R$ 34,000 R$ 36,000 R$ 38,000 R$ 40,000 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 Constant (2015) Reais
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+ Net government capital income + net production taxes
+ Imputed rent (7%) – social contributions (14%) + insurance/pension fund income (1%) + household undistributed profits (6%) = Gross wages + pensions + self-employed income + capital income ≈ 71% of NI Correct survey incomes by ratio yfiscal / ysurvey by percentile where it is > 1 Assume a correlation structure between fiscal and missing income (Gumbel Copula) Normalize distribution by national income
R$ 0 R$ 1,000,000 R$ 2,000,000 R$ 3,000,000 R$ 4,000,000 R$ 5,000,000 R$ 6,000,000 2001 2003 2005 2007 2009 2011 2013 2015 Million (2015) Reais
Notes: The figure shows the evolution of total real income in billions of Reals across datasets and income concepts. The Survey + Tax data series uses survey incomes up to the percentile where average percentile income in the surveys is less than or equal
Figure 1. Evolution of total real income in Brazil: 2001-2015
National Accounts (national income) National Accounts (fiscal income) Survey + Tax data (fiscal income) Survey data Tax data
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Notes: Distribution of pretax national income (before taxes and transfers, except pensions and unemployment insurance) among adults. Corrected estimates (combining survey, fiscal and national accounts data). Equal-split-adults series (income of married couples divided by two).
5% 10% 15% 20% 25% 30% 35% 40% 45% 50% 55% 60% 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Figure 2. Income inequality in Brazil: DINA estimates
Top 10% Middle 40% Bottom 50%
Notes: Distribution of pretax national income (before taxes and transfers, except pensions and unemployment insurance) among adults. Corrected estimates (combining survey, fiscal and national accounts data). Equal-split-adults series (income of married couples divided by two).
5% 10% 15% 20% 25% 30% 35% 40% 45% 50% 55% 60% 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Figure 2. Income inequality in Brazil: DINA estimates
Top 10% Middle 40% Bottom 50%
+2.0%
+11.2%
Notes: Distribution of income (before taxes and transfers, except pensions and unemployment. insurance) among adults in
income series (combining national accounts, surveys and fiscal data). Equal-split-adults series (income of married couples divided by two).
6% 8% 10% 12% 14% 16% 18% 20% 22% 24% 26% 28% 30% 32% 34% 36% 38% 40% 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Figure 8. Top 1% in Brazil: survey vs fiscal vs DINA series
National income series Fiscal income series Survey income series
Notes: Distribution of pretax taxable labour income (before taxes and transfers, except pensions and unemployment insurance) among adults. Corrected estimates (combining survey, fiscal and national accounts data). Equal-split-adults series (income of married couples divided by two).
0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50% 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Figure 9. Labour income shares in Brazil: corrected estimates
Top 10% Middle 40% Bottom 50%
+2.2% +19.5%
Notes: Distribution of pre-tax income (before taxes and transfers, except pensions and unemployment insurance) among adults compared to a fiscal total income series (combining surveys and fiscal data) and a national income series (combining national accounts, surveys and fiscal data). Equal-split-adults series (income of married couples divided by two).
6% 8% 10% 12% 14% 16% 18% 20% 22% 24% 26% 28% 30% 32% 34% 36% 38% 40% 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Figure 10. Top 1% in Brazil: labour income vs total income
Top 1% (national income) Top 1% (fiscal income) Top 1% (labour income)
Notes: Distribution of income (before taxes and transfers, except pensions and unemployment insurance) among adults. Raw estimates from surveys and a national income series (combining national accounts, surveys and fiscal data). Equal-split- adults series (income of married couples divided by two).
0.500 0.520 0.540 0.560 0.580 0.600 0.620 0.640 0.660 0.680 0.700 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Figure A.4. Gini coefficients in Brazil: 2001-2015
Gini (national income) Gini (survey income)
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25.9% 36.5% 0.7% 1%
21.3% 14.7% 0.1% 0.1%
84.8% 22.3% 0.04% 0.01%
121.5% 13.8% 0.01% 0.001%
Notes: Distribution of pre-tax national income among equal-split adults. The unit is the adult individual (20-year-old and over; income of married couples is split into two). Fractiles are defined relative to the total number of adult individuals in the population. Corrected estimates (combining survey, fiscal and national accounts data).
(distribution of per adult pre-tax national income)
(2001-2015)
(2001-2015)
(equal sharing)
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€405,698 €352,921 €1,000,041
€1,857,471 €1,208,114 €4,614,051
€8,520,530 €4,226,609 €21,550,391
€40,147,935 €12,894,262 €94,063,272
Notes: The unit is the adult individual (20-year-old and over; income of married couples is split into two). In 2014, 1 Euro = 2.32 reals (purchasing power parity). Income corresponds to pre-tax national income. Fractiles are defined relative to the total number of adult individuals in the population. Corrected estimates combine national accounts, surveys and fiscal data.
(distribution of per adult pre-tax income)
(2014 Euros PPP)
(2014 Euros PPP)
(2014 Euros PPP)
Notes: Distribution of pretax national income (before taxes and transfers, except pensions and unemployment. insurance) among adults. Corrected estimates (combining national accounts, surveys and fiscal data). Equal-split-adults series (income
20% 22% 24% 26% 28% 30% 32% 34% 36% 38% 40% 42% 44% 46% 48% 50% 52% 54% 56% 58% 60% 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Figure 11. Top 10% income share: Brazil vs other countries
Brazil USA China France India Russia
Notes: Distribution of pretax national income (before taxes and transfers, except pensions and unemployment. insurance) among adults. Corrected estimates (combining national accounts, surveys and fiscal data). Equal-split-adults series (income
0% 2% 4% 6% 8% 10% 12% 14% 16% 18% 20% 22% 24% 26% 28% 30% 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Figure 14. Top 1% income share: Brazil vs other countries
Brazil USA China France India Russia
Notes: Distribution of pretax national income (before taxes and transfers, except pensions and unemployment. insurance) among adults. Corrected estimates (combining national accounts, surveys and fiscal data). Equal-split-adults series (income
5% 7% 9% 11% 13% 15% 17% 19% 21% 23% 25% 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Figure 13. Bottom 50% income share: Brazil vs other countries
Brazil China USA France India Russia
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Notes: Morgan and Souza (forthcoming), using income tax tabulations and SNA.
0% 4% 8% 12% 16% 20% 24% 28% 32% 36% 40% 1926 1932 1938 1944 1950 1956 1962 1968 1974 1980 1986 1992 1998 2004 2010
Top 1% share of fiscal income in Brazil: 1926-2015 (preliminary series)
Notes: Morgan and Souza (forthcoming), using income tax tabulations and SNA.
0% 4% 8% 12% 16% 20% 24% 28% 32% 36% 40% 1926 1932 1938 1944 1950 1956 1962 1968 1974 1980 1986 1992 1998 2004 2010
Brazil Argentina India South Africa
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Notes: Morgan and Souza (forthcoming), using income tax tabulations and SNA.
0% 2% 4% 6% 8% 10% 12% 14% 16% 18% 20% 22% 24% 26% 28% 30% 32% 34% 36% 38% 40% 1926 1932 1938 1944 1950 1956 1962 1968 1974 1980 1986 1992 1998 2004 2010
Vargas & Estado Novo dictatorship Military dictatorship "Social democractic / Labour" turn "New Republic"
Notes: Morgan and Souza (forthcoming), using income tax tabulations and SNA.
10% 15% 20% 25% 30% 35% 40% 45% 50% 55% 60% 65% 70% 75% 1926 1932 1938 1944 1950 1956 1962 1968 1974 1980 1986 1992 1998 2004 2010
Top 10% Top 1%
Notes: Morgan and Souza (forthcoming), using income tax tabulations and SNA.
10% 15% 20% 25% 30% 35% 40% 45% 50% 55% 60% 65% 70% 75% 1926 1932 1938 1944 1950 1956 1962 1968 1974 1980 1986 1992 1998 2004 2010
Top 10% Top 10% (DINA) Top 1% Top 1% (DINA)
Notes: Distribution of pretax national income (before taxes and transfers, except pensions and unemployment insurance) among adults. Corrected estimates (combining survey, fiscal and national accounts data). Equal-split-adults series (income of married couples divided by two). The annual share of social assistance transfers in national income is added to the share of the Bottom 50% and taken away from the share of the Top 10% to illustrate the maximum inequality reduction that can be achieved with these benefits at their current levels.
5% 10% 15% 20% 25% 30% 35% 40% 45% 50% 55% 60% 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Figure A.5 Income inequality in Brazil: DINA estimates (incl. cash transfers)
Top 10% Top 10% (incl. welfare cash transfer payments) Middle 40% Bottom 50% Bottom 50% (incl. welfare cash transfers received)
2001 100% 78% 63% 71% 60% 50% 29% 17% 12% 2002 100% 77% 62% 71% 61% 49% 29% 16% 12% 2003 100% 74% 60% 70% 60% 48% 30% 14% 12% 2004 100% 71% 58% 68% 58% 46% 32% 14% 11% 2005 100% 72% 59% 69% 59% 48% 31% 13% 11% 2006 100% 72% 60% 69% 60% 48% 31% 12% 12% 2007 100% 71% 58% 42% 69% 59% 48% 33% 31% 12% 10% 9% 2008 100% 71% 58% 46% 69% 59% 48% 35% 31% 12% 10% 11% 2009 100% 73% 59% 46% 73% 61% 49% 35% 27% 12% 10% 11% 2010 100% 71% 56% 45% 70% 59% 47% 34% 30% 12% 9% 11% 2011 100% 71% 54% 46% 70% 59% 46% 34% 30% 12% 8% 12% 2012 100% 71% 56% 46% 70% 60% 47% 34% 30% 11% 9% 12% 2013 100% 71% 55% 45% 71% 60% 46% 33% 29% 11% 8% 12% 2014 100% 73% 57% 47% 73% 62% 48% 35% 27% 11% 9% 12% 2015 100% 75% 58% 49% 75% 64% 49% 36% 25% 12% 8% 13% DIRPF Labour Income PNAD Labour Income SNA Fiscal Labour Income SNA National Labour Income Year
Notes: The table shows the ratio of the income of each dataset to the total net national income of the economy. For instance in 2015, the total income we measure in the tax data accounts for 49% of national income, while the equivalent income conept from the survey is 58%. The equivalent income concept estimated from national accounts is 75% of national income. While 75% of total national income is labour income, 64% is labour income defined for fiscal purposes, 49% is labour income in the survey and 36% is labour income in the tax data. The PNAD incomes are from the microfiles provided by the IBGE, while incomes from the DIRPF are from detailed tabulations provided by the Secretaria da Receita Federal do Brasil. SNA data is from IBGE. Percentages may not add up due to rounding. Mixed income is divided up between labour and capital income in proportion to the division
Table 1. Comparison of incomes in the System of National Accounts (SNA), Household Surveys (PNAD) and Income Tax Declarations (DIRPF)
Total income (% national income)
DIRPF PNAD SNA Fiscal Income SNA National Income DIRPF Capital Income PNAD Capital Income SNA Fiscal Capital Income SNA National Capital Income
Notes: the figure shows ratios between average incomes in the tax data and average incomes in surveys for each percentile
0.00 0.25 0.50 0.75 1.00 1.25 1.50 1.75 2.00 2.25 2.50 2.75 3.00 P80 P81 P82 P83 P84 P85 P86 P87 P88 P89 P90 P91 P92 P93 P94 P95 P96 P97 P98 P99 Tax average income / survey average income at percentile p
Figure A.1. Ratios between tax and survey average incomes in Brazil: 2007-2015
2007 2008 2009 2010 2011 2012 2013 2014 2015
5 10 15 20 25 30 35 40 45 50 55 P99.0 P99.1 P99.2 P99.3 P99.4 P99.5 P99.6 P99.7 P99.8 P99.90 P99.91 P99.92 P99.93 P99.94 P99.95 P99.96 P99.97 P99.98 P99.990 P99.991 P99.992 P99.993 P99.994 P99.995 P99.996 P99.997 P99.998 P99.999 Tax average income / survey average income at percentile p
Figure A.2. Ratios between tax and survey average incomes in Brazil above P99: 2007-2015
2007 2008 2009 2010 2011 2012 2013 2014 2015
Notes: the figure shows ratios between average incomes in the tax data and average incomes in surveys for each percentile
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Notes: The figure shows the evolution of total real labour income in millions of Reals across datasets and income concepts. The Survey + Tax data series combines taxable labour income assessed for tax purposes in the two datasets. Taxable labour income includes wages, pensions and self-employment pro-labore income on which the income tax applies. The difference with SNA fiscal labour income is that it excludes annual bonuses, the exempt portions of pensions and agricultural income, indemnity income for the termination of a contract and unemployment insurance. The difference with national labour income is that it excludes employer fringe benefits and payroll taxes and any potential tax evasion.
R$ 0 R$ 500,000 R$ 1,000,000 R$ 1,500,000 R$ 2,000,000 R$ 2,500,000 R$ 3,000,000 R$ 3,500,000 R$ 4,000,000 R$ 4,500,000 2001 2003 2005 2007 2009 2011 2013 2015 Million (2015) Reais
Figure A.3. Evolution of labour income in Brazil: 2001-2015
SNA National Labour Income SNA Fiscal Labour Income Survey + Tax Data (Taxable Labour Income)
Full population 18.2% 100.0% 100.0% 10.4% 7.1%
Bottom 50% 31.4% 21.8% 13.3% 15.2% 14.1%
Middle 40% 9.3% 16.9% 31.5% 6.5% 2.6%
Top 10% 20.6% 61.3% 55.2% 11.6% 8.0%
25.9% 36.5% 26.9% 15.5% 9.0%
21.3% 14.7% 12.6% 13.1% 7.2%
84.8% 22.3% 7.2% 119.9%
121.5% 13.8% 3.7% 196.8%
Notes: Distribution of pre-tax national income among equal-split adults. The unit is the adult individual (20-year-old and over; income of married couples is split into two). Fractiles are defined relative to the total number of adult individuals in the population. Corrected estimates (combining survey, fiscal and national accounts data).
Table 4. Income growth, recession and inequality in Brazil: 2001-2015
Income groups
(distribution of per adult pre-tax national income)
Average income share (2001-2015) Total cumulated growth (2001-2015) Fraction of total growth captured (2001-2015) Total cumulated growth (2001-2007) Total cumulated growth (2007-2015) Total growth (2014-2015)
Notes: Distribution of income (before taxes and transfers, except pensions and unemployment insurance) among adults in our three series, raw estimates from surveys, a fiscal income series (combining surveys and fiscal data) and a national income series (combining national accounts, surveys and fiscal data). Equal-split-adults series (income of married couples divided by two).
30% 32% 34% 36% 38% 40% 42% 44% 46% 48% 50% 52% 54% 56% 58% 60% 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Figure 5. Top 10% in Brazil: survey vs fiscal vs DINA series
National income series Fiscal income series Survey income series
Notes: Distribution of income (before taxes and transfers, except pensions and unemployment insurance) among adults in our three series, raw estimates from surveys, a fiscal income series (combining surveys and fiscal data) and a national income series (combining national accounts, surveys and fiscal data). Equal-split-adults series (income of married couples divided by two).
16% 18% 20% 22% 24% 26% 28% 30% 32% 34% 36% 38% 40% 42% 44% 46% 48% 50% 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Figure 6. Middle 40% in Brazil: survey vs fiscal vs DINA series
Survey income series Fiscal income series National income series
Notes: Distribution of income (before taxes and transfers, except pensions and unemployment insurance) among adults in our three series, raw estimates from surveys, a fiscal income series (combining surveys and fiscal data) and a national income series (combining national accounts, surveys and fiscal data). Equal-split-adults series (income of married couples divided by two).
4% 6% 8% 10% 12% 14% 16% 18% 20% 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Figure 7. Bottom 50% in Brazil: survey vs fiscal vs DINA series
Survey income series Fiscal income series National income series
Notes: Distribution of pretax national income (before taxes and transfers, except pensions and unemployment. insurance) among adults. Corrected estimates (combining national accounts, surveys and fiscal data). Equal-split-adults series (income
20% 22% 24% 26% 28% 30% 32% 34% 36% 38% 40% 42% 44% 46% 48% 50% 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Figure 12. Middle 40% income share: Brazil vs other countries
Brazil China USA France India Russia
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