Earnings inequality

Are we measuring poverty and inequality correctly? Comparing earnings using tax and survey data

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Martin Wittenberg on 3 October 2017

Calculating the earnings Gini coefficient with survey data from the Quarterly Labour Force Survey (QLFS) may lead to an underestimation of inequality. When one compares earnings in the tax assessments data to those in the QLFS, it appears that the earnings of employees in the QLFS are underreported. Benefits and annual bonuses contribute substantially to the gap. In the case of self-employment incomes, the top earnings in the QLFS are also underreported, but the tax data seems to miss many mid- and low-income earners.