Simplified distributional national accounts

Authors:

Thomas Piketty, Paris School of Economics
Emmanuel Saez, University of California, Berkeley
Gabriel Zucman, University of California, Berkeley

Abstract:

This paper develops a simplified methodology that starts from the fiscal income top income share series and makes very basic assumptions on how each income component from national income that is not included in fiscal income is distributed. This simplified methodology has two main goals.

First and most important, it can be used to create distributional national income statistics in countries where fiscal income inequality statistics are available but where there is limited information to impute other income at the individual level. Alvaredo et al. (2016) distributional national accounts guidelines proposed a simplified methodology for countries with less data (Section 7). The methodology proposed here can be seen as an even simpler method that can be applied to countries for which fiscal income top income share statistics exist and for which national accounts and fiscal income aggregates are sufficiently detailed.

Second, this simplified methodology can also be used to assess the plausibility of the Piketty, Saez, and Zucman (2018) assumptions. In particular, we will show that the simplified methodology can be used to show that the alternative assumptions proposed by Auten and Splinter (2018) imply a drastic equalization of income components not in fiscal income which does not seem realistic.