National and Regional Estimates of Income Inequality in Russia Using Household Income Survey and Tax Data

This paper presents a methodology for assessing income inequality based on data from Rosstat’s Statistical Survey of Population Income and Participation in Social Programs (SSIPSP) and tax data at the regional level. The income figures from paid employment for the highest income regional groups in the survey are replaced with the average income for those income groups from tax data. SSIPSP data are adjusted by the tax data within each region. Income adjustments can be applied without dividing the sample into regional subsets, but in this case the uppermost incomes are adjusted in accordance with the overall tax data distribution. To reconcile the sizes of groups of income recipients in the SSIPSP and tax data, an interpolation of tabulated tax data is applied based on a generalized Pareto curves approach. After personal income from paid employment is adjusted, the adjusted total household income and per capita income to be used for assessing income inequality can be derived. The paper presents comparisons of income inequality obtained from the empirical survey data, as well as from the adjusted survey data based on tax reporting at the national and regional levels. The regional adjustments ensure more accurate measures of both national and regional income inequality. This advantage is due to taking territorial differences in income into account by replacing the highest incomes reported in the survey by the average values from the tax data within each region.

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