| Abstract: |
After increasing over more than a decade, recent studies based on household
surveys data show that income inequality in Uruguay started to decline in
2008. In this study we assess whether this trend is robust to the use of novel
micro-data from the recently restored Uruguayan personal income tax for the
years 2009-2011. We analyze primary income and pensions and carry out to main
comparative exercises. In the first part of the paper, we adjust household
surveys to make them comparable to tax records. After that, we follow the
methodology proposed by Atkinson et al (2011) and Alvaredo (2011) to compute
top income shares and corrected inequality measures. We also investigate the
redistributive effect of the personal income tax burden in the two data sets.
Inequality indexes depict a similar trend in inequality reduction, even though
the decrease is less sharp in tax records than in harmonized household
surveys. According to our estimations from income tax data, the share of the
top 1% did not decline in this period, and was situated around 14%. Household
survey data underestimate the share of the top 1% in total income by
approximately 3 p.p. and depict an opposite trend in the top shares evolution
throughout the period compared to the one observed in income tax micro-data.
This result might be revealing an increasing difficulty of ECH for capturing
very high incomes. Finally, personal income tax in Uruguay redistributes
roughly 2 p.p. of the Gini index. Effective tax rates exhibit a progressive
pattern in the case of total income, labour income and pensions, whereas they
are slightly regressive when considering capital income. |