Premium
Comparative Research with Net and Gross Income Data: An Evaluation of Two Netting Down Procedures for the LIS Database
Author(s) -
Nieuwenhuis Rense,
Munzi Teresa,
Gornick Janet C.
Publication year - 2017
Publication title -
review of income and wealth
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.024
H-Index - 57
eISSN - 1475-4991
pISSN - 0034-6586
DOI - 10.1111/roiw.12233
Subject(s) - netting , economics , net income , database , econometrics , gross income , computer science , public economics , accounting , finance , tax reform , state income tax
Researchers seeking to perform country‐comparative and trend analyses using income data have to account for the fact that income surveys differ in whether income is measured gross or net of taxes and contributions. We discuss, develop, and evaluate two ‘netting down procedures’ for data in the LIS Database. Evaluations of these netting down procedures indicate that comparisons across gross and net datasets can be greatly improved when netting down procedures are applied. In several cases, however, substantial amounts of bias remain.