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LWS and LIS Income Variables, Income from Wealth and Income from Labor, an Exploratory Analysis

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

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  1. 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

  2. Outline • I. LWS INCOME CONCEPTS • II. LWS AND INCOME NET WORTH • III. NEXT STEPS

  3. LWS Income Variables • LIS concepts • Canberra Group • Simplicity • Coverage See: http://www.lisproject.org/lws/dec06_meeting/niskanen.pdf

  4. Household variables

  5. Summary Income Variables

  6. II. INCOME FROM LABOR VS. INCOME FROM WEALTH

  7. 1. Incomplete LWS income measures: Simplification of Definitions

  8. 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

  9. 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

  10. 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)

  11. 5. Preliminary “Test” Results

  12. 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

  13. 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

  14. IV. COMMENTS AND DISCUSSION, PLEASE?

  15. THANK YOU!

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