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Is Inequality Underestimated in Egypt? Evidence from House Prices

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  • Roy van der Weide
  • Christoph Lakner
  • Elena Ianchovichina

Abstract

Household income surveys often fail to capture top incomes, which leads to an underestimation of income inequality. A popular solution is to combine the household survey with data from income tax records, which has been found to result in significant upward corrections of inequality estimates. Unfortunately, tax records are unavailable in many countries, including most of the developing world. In the absence of data from tax records, this study explores the feasibility of using data on house prices to estimate the top tail of the income distribution. In an application to Egypt, where estimates of inequality based on household surveys alone are low by international standards, the study finds strong evidence that inequality is indeed being underestimated by a considerable margin. The Gini index of household per capita income for urban Egypt is found to increase from 39 to 52 after correcting for the missing top tail.

Suggested Citation

  • Roy van der Weide & Christoph Lakner & Elena Ianchovichina, 2018. "Is Inequality Underestimated in Egypt? Evidence from House Prices," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 64(s1), pages 55-79, October.
    • Handle: RePEc:bla:revinw:v:64:y:2018:i:s1:p:s55-s79
    DOI: 10.1111/roiw.12338
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