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Measuring top income shares in the UK

Author

Listed:
  • Advani, Arun

    (University of Warwick, CAGE, the Institute for Fiscal Studies (IFS), and the LSE International Inequalities Institute (III))

  • Summers, Andy

    (London School of Economics, LSE III, CAGE and IFS)

  • Tarrant, Hannah

    (London School of EconomicsLSE III.)

Abstract
Information about the share of total income held by the richest 1%, or other top income groups, is increasingly used to discuss inequality levels and trends within and between nations. A top income share is the ratio of the total income held by the top income group divided by total personal income (the ‘income control total’). We compare two approaches to estimating income control totals: the ‘external’ approach used by the World Inequality Database, and an augmented ‘internal’ approach. We argue in favour of the latter, with reference to five desirable properties that a top share series would ideally possess. The choice matters: our augmented ‘internal’ approach yields estimates of the UK top 1% share that are around 2 percentage points higher than the ‘external’ approach.

Suggested Citation

  • Advani, Arun & Summers, Andy & Tarrant, Hannah, 2022. "Measuring top income shares in the UK," CAGE Online Working Paper Series 610, Competitive Advantage in the Global Economy (CAGE).
    • Handle: RePEc:cge:wacage:610
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    File URL: https://warwick.ac.uk/fac/soc/economics/research/centres/cage/manage/publications/wp610.2022.pdf
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    References listed on IDEAS

    as
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    Keywords

    income inequality; measurement; national accounts; top shares JEL Classification:;
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