- Statistics Norway and University of Oslo
Wednesday, February 26, 2020
Polo Santa Marta, Via Cantarane 24, Sala Vaona
This paper discusses the measurement of business income and its impact on the level and evolution of income inequality in Norway over the period 2001 - 2016. We rely on administrative tax records containing detailed information on all sources of taxable income for the full population of households and use measures of income and income inequality corresponding to those reported in official statistics as benchmarks. Note that the income data used in official statistics do also form the basis of international research that employ income data. Simialr as Alstadsæter, Kopczuk, Jacob, and Telle (2016), we overcome measurement problems related to official measures of business income by combining several sources of administrative register data: Using information on the number of shares held by each owner of all Norwegian limited liability firms, we link administrative tax records with firm level annual accounts and balance sheet data, and develop a measure of business income that is neither subject to strategic realization decisions nor to double counting of income from indirectly held firms. Improving the measurement of business income leads to a substantial increase in income inequality estimates as compared to what is reported by conventional official statistics. For instance, the share of income attributable to the top 1% of the population more than doubles and the Gini coefficient estimates increase by about 25%.