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LWS and LIS Income Variables, Income from Wealth and Income from Labor, an Exploratory Analysis. Emilia Niskanen and Timothy Smeeding, Luxembourg Income Study LWS Final Conference in Rome, July 5-7, 2007. Outline. I. LWS INCOME CONCEPTS II. LWS AND INCOME NET WORTH III. NEXT STEPS.
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LWS and LIS Income Variables, Income from Wealth and Income from Labor, an Exploratory Analysis Emilia Niskanen and Timothy Smeeding, Luxembourg Income Study LWS Final Conference in Rome, July 5-7, 2007
Outline • I. LWS INCOME CONCEPTS • II. LWS AND INCOME NET WORTH • III. NEXT STEPS
LWS Income Variables • LIS concepts • Canberra Group • Simplicity • Coverage See: http://www.lisproject.org/lws/dec06_meeting/niskanen.pdf
1. Incomplete LWS income measures: Simplification of Definitions
2. More complete: Full Income or Income Net Worth • Haig-Simons Income: Consumption Plus Change Net Worth • Income types: • Labor Income • Self-employment Income • Income from Capital • Taxes and Transfers
3. What to do about it? • GIW • AGI = GIW minus ‘reported’ capital income (CPRI) • FGI1 = AGI plus 2 percent ‘real’ return • FGI2 = AGI plus 4 percent ‘real’ return
4. Methods • Countries: • Canada 1998 • Finland 1998 • Germany 2001 • Italy 2002 (NET) • Sweden 2002 • The U.S. 2000 • Net Worth 1 vs. New Worth 2 • Top codes (not yet)
6. Discussion • Finland vs. The U.S. • Quality of Data • Quality of Assumptions • Effect on Rank Ordering of Nations, e.g. 90/10 or Gini Ratios, GIW vs FGI2
III. NEXT STEPS • 1. EXPLORE THE DIFFERENCES FURTHER BY AGE, FAMILY TYPE • 2. IMPROVE VALUE OF INCOME FROM WEALTH COMPONENTS • 3. TOP CODE WEALTH AT 99 % PERCENTILE