Non-cash Income, Living Standards and Inequality: Evidence from the Luxembourg Income Study

Saunders, Peter; Smeeding, Timothy M.; Coder, John; Jenkins, Stephen P.; Fritzell, Johan; Hagenaars, Aldi; Hauser, Richard; Wolfson, Michael

doi:10.1007/978-1-349-22988-8_11

“…A household's decision to move into homeownership represents a trade-off: it means forgoing the opportunity to invest in financial assets that would create real income flows through interest or dividends. Taking a capital market approach, Saunders et al (1992) Owner-specific housing costs include the costs of financing the self-occupied home. With respect to IR one needs to differentiate between repayment of a mortgage (amortization which resembles savings) and mortgage interest (considered as consumption).…”

Section: The "User Cost Method" or "Capital Market" Approachmentioning

confidence: 45%

Assessing the Distributional Impact of 'Imputed Rent' and 'Non-Cash Employee Income' in Microdata: Case studies based on EU-SILC (2004) and SOEP (2002)

Frick

¹

,

Goebel

²

,

Grabka

³

2007

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. However, while we can identify some cross-national differences, we cannot clearly determine the degree to which the variation between Denmark, Finland, and France actually depends on the choice of the methodology applied to measure IR. A further complication results from the fact that for Denmark and Finland, only a gross measure of IR is given in the currently available EU-SILC data, while for France, a net measure is included. Terms of use: Documents in ASSESSING THE DISTRIBUTIONAL IMPACT OF "IMPUTED RENT" AND "NON-CASH EMPLOYEE INCOME" IN MICRODATA: CASE STUDIES BASED ON EU-SILC (2004) AND SOEP (2002)BerlinApparently a gross measure is not appropriate for the type of welfare-oriented analysis presented here. Furthermore, we find evidence that the substantive results on inequality are SOEP Survey Papers 231 3 sensitive to the choice of the approach in the German data, thus supporting the principal demand for an extensively harmonized measure across countries.

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“…The user cost can be derived from optimizing models of consumer behavior with durable goods (Dougherty and Van Order, 1982). Taking a capital market approach, Saunders et al (1992) described their empirical calculation of imputed interest from homeowner capital tied up in housing as follows:…”

Section: The "User Cost Method" or "Capital Market" Approachmentioning

confidence: 49%

Distributional effects of imputed rents in five European countries

Frick

¹

,

Grabka

²

,

Smeeding

³

et al. 2010

Journal of Housing Economics

Self Cite

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Most empirical distributional studies of well-being in developed countries rely on distributions of disposable income. From a theoretical point of view this practice is contentious since a household's command over resources is determined not only by its spending power over commodities it can buy in the market but also on resources available to the household members through non-market mechanisms such as the in-kind provisions of the welfare state and the value of private non-cash incomes. In developed market economies the most important private non-cash income component is imputed rent from owneroccupied or subsidized accommodation. Employing a wider definition of imputed rent that also allows the analyst to capture income advantages among tenants living in rentsubsidized accommodations of various sorts (including rent-free or reduced-rent households), the present paper examines the differential effects of including imputed rents in the concept of resources in five European countries (Belgium, Germany, Greece, Italy and the UK). The results suggest that in almost all cases, the inclusion of imputed rents in the concept of resources leads to a decline in measured levels of inequality and poverty. The main beneficiaries are outright homeowners and households living in rent-free (or heavily subsidised) accommodation -most often older persons. The inclusion of imputed rents in the concept of resources does not lead to substantial changes in the ranking of the countries according to their level of inequality, despite widespread differences in the rates of home ownership and subsidization across the countries studied here. Terms of use: Documents in2

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“…The work currently being done on the appropriateness of income as a measure of well-being (Travers and Richardson, 1991), on the treatment of non-cash income in the Luxembourg Income Study (Saunders, 1992), and on static (Burkhauser and Wilkinson, 1985) and dynamic (Harding, 1992) life-cycle approaches to lifetime distribution of income, is indicative of a return of interest to the issues which were at the focus of earlier income distribution work. This paper similarly returns to a focus on the implications of the underlying definitions of income in income distribution studies.…”

mentioning

confidence: 99%

Imputed Rent and Income Distribution

Yates

¹

1994

Review of Income and Wealth

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This paper uses unit record survey data to implement a 1977 United Nations recommendation that imputed rent from owner‐occupied housing be included in household income in statistics collected for income distribution purposes. The conceptual difficulties associated with employing the recommended National Accounts approach are highlighted by a comparison of the methodologies used to impute housing income for National Accounts purposes, for use in income distribution analyses and for income taxation purposes. The empirical difficulties associated with implementing the preferred approach are also discussed. The results reinforce the significant impact owner‐occupation has on the well‐being of many households and point to the importance of a disaggregate analysis of its distributional impact.

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Non-cash Income, Living Standards and Inequality: Evidence from the Luxembourg Income Study

Cited by 11 publications

References 1 publication

Assessing the Distributional Impact of 'Imputed Rent' and 'Non-Cash Employee Income' in Microdata: Case studies based on EU-SILC (2004) and SOEP (2002)

Assessing the Distributional Impact of 'Imputed Rent' and 'Non-Cash Employee Income' in Microdata: Case studies based on EU-SILC (2004) and SOEP (2002)

Distributional effects of imputed rents in five European countries

Imputed Rent and Income Distribution

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