Distributional Workplace Accounts: Concepts, Methods and Estimates for Income and Production Classes

• In Event: 30451 - Inequality

Abstract

In this paper, we propose a new conceptualization and measurement method to study income inequality: Distributional Workplace Accounts (DIWA). DIWA integrates personal and functional income distributions to measure the distribution of pretax factor income among (1) income classes according to adult individuals' ranked income and (2) production classes according to adult individuals' employment status and the characteristics of their firms. To construct DIWA, we utilize individual administrative tax records and linked employer-employee tax records collected by the Israeli Tax Authority, consisting of micro-level data for all tax-reporting income earners in 1987-2022, and combine them with workplace tax records, population registers, and imputed observations for the unemployed and those outside the labor force. By combining these data sources, DIWA makes it possible, for the first time, to capture nearly 100% of the national income, directly observed at the individual or their workplace, and 100% of the national population. Our analysis is straightforward yet descriptively significant: we aim to identify the structure of income inequality by estimating the distribution of labor, capital, and total national income across different income and production classes, as well as examining how these distributions have evolved over time. The primary objectives of this paper are descriptive and conceptual, serving as an initial step toward a comprehensive causal analysis.

Author

• Tali Kristal, University of Haifa