HLEG workshop on Measuring Inequalities of Income and Wealth, 15-16 September 2015, Berlin, Germany, More information at: http://oe.cd/hleg-workshop-inequalities-income-and-wealth

1. Distributional National Accounts
DINA
Facundo Alvaredo
Anthony B. Atkinson
Thomas Piketty
Emmanuel Saez
Gabriel Zucman
OECD HLEG Workshop on Measuring Inequalities of Income and Wealth
Berlin, September 15-16, 2015

2. • Envision a realistic plan and timetable for harmonized, annual, global
“distributional national accounts”
• It will probably take a long time before we are able to develop official,
consensual DINAs. For many years –decades– to come, inequality statistics
will still be produced by various groups (academics, statistics institutes…).
• It took a long time (1910-1950s) before scholars could hand over the
computation of NI and GDP to official institutes.
• It took a long time (1950-2000s) before official national accounts were able
to standardize stocks accounts (first consistent balance sheets in Germany
released in 2010)
• In the WTID series, despite efforts, the units of observation, the income
concepts and the Pareto interpolation techniques were never made fully
homogeneous over time and across countries.
• In the WTID series, attention is restricted to the top decile income share,
rather than the entire distribution.

3. Overall DINA agenda:
• Producing annual estimates of the distribution of income and wealth
using concepts of income and wealth that are consistent with the
national accounts.
• Producing synthetic micro-files on an annual basis (income, wealth, age,
gender, savings)
• DINA and associated micro-files expected to be fully consistent across
time, countries, income and wealth definitions, and cover the whole
distribution.
• DINA as a new tool to connect inequality and macro
• Defining a clear common conceptual framework
• Incorporating results from economic theory
• Developing statistics techniques to fruitfully use information from
available micro sources
• Estimating income/wealth growth rates for tiny groups of the distrib.

4. US: Piketty, Saez,
Zucman
France: Garbinti,
Goupille, Piketty
UK: Alvaredo,
Atkinson
W2ID Working Paper 2015-01
Distributional National Accounts (DINA) Guidelines:
Concepts and Methods used in the W2ID *
Facundo Alvaredo, Anthony B. Atkinson, Thomas Piketty,
Emmanuel Saez, Gabriel Zucman
This version: September 2nd
, 2015 (Preliminary and incomplete)
Section 1. Introduction
Section 2. Units of observation
Section 3. Income concepts
Section 4. Wealth concepts
Section 5. Basic imputation methods
Section 6. Reconciling wealth inequality sources
Section 7. Synthetic micro-files
Section 8. Countries/years with limited data
Section 9. Concluding comments
References
Appendix 1. List of template summary tables for country DINAs
Appendix 2. List of variables in prototype synthetic micro-files
* This document aims to synthesize the concepts and methods used in the W2ID

5. • Benchmark unit of observation: the adult 20+ individual
! In joint taxation countries we assume a 50-50% split
! Whenever possible: also “equal-split inequality” (full
redistribution of resources between spouses)
! Intermediate splitting hypothesis possible
! Dependent children taken into account for the relevant
cash and in-kind transfers
• Geographical scope: world/country/states
! Synthetic micro-files: can be aggregated from country to
world and regional level with the appropriate population
weights
• Dimensions: income, wealth, age, gender

6. Three income concepts
• Personal factor income
• Personal pre tax income (difficulty contribution-based social
insurance and non-contribution based social assistance)
see table 2) is the sum of the property income received by the non-profit sector,
minus the property income paid by the non-profit sector.
Section 3.2. Factor income
Personal factor income, which for simplicity we generally refer to as "factor income",
and which could also be labeled "personal primary income", or "personal market
income", is equal to the sum of all pretax personal income flows accruing directly or
indirectly to the individual owners of the production factors, labor and capital, before
taking into account the operation of the tax/transfer system, and before taking into
account the operation of the pension system.
19
Section 3.3. Pretax income
Personal pretax income, which for simplicity we generally refer to as "pretax income",
is equal to the sum of all pretax personal income flows accruing to the individual
owners of the production factors, labor and capital, before taking into account the
operation of the tax/transfer system, but after taking into account the operation of the
pension system.
The relation between pretax income, factor income and national income is presented

7. • Personal disposable income
Section 3.4. Disposable income
Disposable income, which could also be labeled "personal disposable income", is
equal to the sum of all income flows accruing to individuals, after taking into account
the operation of the tax and transfer system.

8. Personal factor income = 1 661 101%
= Net national income of Total economy (B5n, S1) 1 642 100%
- Property income (D4) received by General government Sector (S13) - 22 -1%
+ Property income (D4) paid by General government Sector (S13) 42 3%
- Property income (D4) received by NPSIH (non-profit) Sector (S15) - 7 0%
+ Property income (D4) paid by NPSIH (non-profit) Sector (S15) 6 0%
Personal factor income = 1 661 101%
= Primary income of Household Sector (B5n, S14) 1 358 83%
+ Primary income of Corporations Sector (B5n, S11+S12) 112 7%
+ Taxes on production (net) (D2-D3) received by General govt. Sector (S13) 191 12%
Personal factor income = 1 661 101%
= Factor labor income 1 341 82%
+ Factor capital income 320 19%
Personal factor labor income = 1 341 82%
= Compensation of employees (D1) received by Household Sector (S1) 1 154 70%
+ Labor share (70%) of net mixed income (B3n + net D45, S14) 33 2%
+ Imputed Taxes on production (net) (in proportion to income) 154 9%
Factor capital income = 320 19%
= Capital share (30%) of net mixed income (B3n + net D45, S14) 14 1%
+ Net operating surplus (housing rents) of Household Sector (B2n, S14) 69 4%
+ Property income (D4 except D45) received by Household Sector (S14) 102 6%
- Property income (D4 except D45) paid by Household Sector (S14) - 14 -1%
+ Undistributed profits (Primary income of Corporations (B5n, S11+S12)) 112 7%
+ Imputed Taxes on production (net) (in proportion to income) 37 2%
Table 3. Personal factor income (DINA)
Computations using SNA 2008 Sequence of Accounts (see DINA_Income_Wealth_Concepts.xls)

9. Net national income of Total economy (B5n, S1) 1 642 100%
Personal pretax income (pension-based definition) = 1 639 100%
= Factor Income 1 661 101%
- Pension contributions (D6111+D6121+D6131+D6141, S14) - 309 -19%
- Investment income payable to pension entitlements (D442, S14) - 8 0%
+ Pension benefits (D6211+D6221, S14) 295 18%
Personal pretax income (broad definition) = 1 652 101%
= Factor income 1 661 101%
- Net social contributions (employer and households) (D61, S14) - 333 -20%
- Investment income payable to pension entitlements (D442, S14) - 8 0%
+ Social insurance benefits (D621+D622, S14) 332 20%
Personal pretax income (broad definition) = 1 652 101%
= Pretax labor income 1 332 81%
+ Pretax capital income 320 19%
Pretax labor income = 1 332 81%
= Factor labor income 1 341 82%
- Net social contributions (employer and households) (D61, S14) - 333 -20%
+ Social insurance income (labor share) (in proportion to contributions) 324 20%
Pretax capital income =
= Factor capital income 320 19%
- Investment income payable to pension entitlements (D442, S14) - 8 0%
+ Social insurance income (capital share) (in proportion to contributions) 8 0%
Social insurance benefits (D621+D622, S14) 332 20%
= Social security benefits in cash (D621, S14) 53 3%
+ Other social insurance benefits (D622, S14) 279 17%
Table 4. Personal pretax income (DINA)
Computations using SNA 2008 Sequence of Accounts (see DINA_Income_Wealth_Concepts.xls)

10. N t ti l i f T t l (B5 S1) 1 642 100%
Table 5. Disposable income (DINA)
Net national income of Total economy (B5n, S1) 1 642 100%
Disposable income (cash income) = 1 300 79%
= Pretax Income (simplified definition) 1 652 101%
- Taxes on production (net) (D2-D3) received by General govt. Sector (S13) - 191 -12%
- Current taxes on income and wealth (D5) received by General govt. (S13) - 213 -13%( ) y g ( )
+ Social assistance benefits in cash (D623, S14) 52 3%
Disposable income (cash income + in-kind transfers) = 1 515 92%
= Pretax Income (simplified definition) 1 652 101%
- Taxes on production (net) (D2-D3) received by General govt. Sector (S13) - 191 -12%
Current taxes on income and wealth (D5) received by General govt (S13) 213 13%- Current taxes on income and wealth (D5) received by General govt. (S13) - 213 -13%
+ Social assistance benefits in cash (D623, S14) 52 3%
+ Social transfers in kind (D63, S14) 215 13%
Disposable income (cash income + in-kind transfers + collective expenditure) = 1 684 103%
= Pretax Income (simplified definition) 1 652 101%
- Taxes on production (net) (D2-D3) received by General govt. Sector (S13) - 191 -12%
- Current taxes on income and wealth (D5) received by General govt. (S13) - 213 -13%
+ Social assistance benefits in cash (D623, S14) 52 3%
+ Social transfers in kind (D63, S14) 215 13%
+ Collective consumption expenditure (P32, S13+S15) 169 10%
Computations using SNA 2008 Sequence of Accounts (see DINA_Income_Wealth_Concepts.xls)

11. Basic imputations methods
• High quality (income tax) micro-data (combination with surveys)
• Upscale incomes to the three income concepts
! Pragmatic but clear and explicit imputations (proportional
upgrading, use of other available information, use legal
information)
! Use of income and wealth surveys
Synthetic micro-files
! Pre-tax income, pre-tax labor income, pre-tax capital
income, factor income, disposable income
! Univariate (no information on joint distributions)
! Joint distribution
oSimple functional form for the copula distribution
G(yl,yk) such as the bivariate Pareto (Atkinson et
al.)

12. 0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
110%
120%
130%
140%
150%
160%
170%
180%
20 30 40 50 60 70 80 90
Avrageincomeorcapitalbyage(%average18+)
Figure 1. Age-income and age-wealth profiles (France DINA 2006)
Total factor income
Factor labor income
Factor capital income
Capital (private wealth)

13. 0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
110%
120%
130%
140%
150%
160%
170%
180%
20 30 40 50 60 70 80 90
Avrageincomeorcapitalbyage(%average21+)
Figure 2. Age-income and age-wealth profiles (DINA 2006)
Pretax Labor income
Pretax Total income
Pretax Capital income
Capital

14. Total pop. 50 366 272 33 551 € 24 284 € 182 572 €
0 503 725 0 € 0 € 0 € 0 € 0 € 0 €
1 503 643 0 € 0 € 0 € 0 € 0 € 0 €
2 503 616 0 € 0 € 0 € 0 € 0 € 0 €
3 503 762 0 € 0 € 0 € 0 € 0 € 0 €
4 503 634 0 € 0 € 0 € 0 € 0 € 0 €
5 503 697 0 € 0 € 0 € 0 € 0 € 0 €
6 503 669 0 € 0 € 0 € 0 € 0 € 0 €
7 503 768 0 € 5 € 0 € 2 € 0 € 0 €
8 503 566 11 € 19 € 12 € 40 € 0 € 0 €
9 503 621 30 € 45 € 79 € 143 € 0 € 0 €
10 503 861 64 € 91 € 235 € 403 € 0 € 0 €
11 503 558 122 € 166 € 588 € 832 € 0 € 0 €
12 503 665 219 € 287 € 1 109 € 1 398 € 0 € 0 €
13 503 650 371 € 463 € 1 706 € 2 017 € 0 € 1 €
14 503 521 560 € 731 € 2 342 € 2 678 € 16 € 72 €
15 504 012 931 € 1 186 € 3 021 € 3 365 € 115 € 178 €
16 503 429 1 453 € 1 652 € 3 686 € 4 017 € 231 € 307 €
17 503 704 1 818 € 1 951 € 4 349 € 4 671 € 362 € 455 €
18 503 514 2 084 € 2 193 € 4 997 € 5 293 € 527 € 632 €
19 503 677 2 302 € 2 400 € 5 541 € 5 867 € 742 € 871 €
20 503 738 2 505 € 2 605 € 6 193 € 6 535 € 988 € 1 128 €
21 503 598 2 700 € 2 793 € 6 867 € 7 187 € 1 267 € 1 446 €
22 503 625 2 888 € 2 992 € 7 511 € 7 810 € 1 613 € 1 789 €
23 504 118 3 087 € 3 195 € 8 104 € 8 388 € 1 989 € 2 205 €
24 503 303 3 305 € 3 413 € 8 669 € 8 944 € 2 421 € 2 668 €
25 503 747 3 525 € 3 632 € 9 220 € 9 475 € 2 928 € 3 210 €
26 503 564 3 738 € 3 852 € 9 727 € 9 968 € 3 509 € 3 770 €
27 503 658 3 967 € 4 093 € 10 201 € 10 431 € 4 053 € 4 452 €
28 503 752 4 230 € 4 370 € 10 666 € 10 891 € 4 829 € 5 271 €
29 503 549 4 507 € 4 661 € 11 116 € 11 359 € 5 724 € 6 156 €
30 503 813 4 833 € 4 986 € 11 621 € 11 862 € 6 601 € 7 134 €
31 503 503 5 148 € 5 319 € 12 087 € 12 312 € 7 661 € 8 327 €
32 503 623 5 496 € 5 681 € 12 545 € 12 777 € 9 014 € 9 770 €
33 503 699 5 871 € 6 079 € 13 013 € 13 248 € 10 542 € 11 323 €
34 503 744 6 290 € 6 506 € 13 486 € 13 718 € 11 972 € 12 856 €
35 503 591 6 729 € 6 965 € 13 940 € 14 173 € 13 811 € 14 853 €
36 503 720 7 210 € 7 475 € 14 412 € 14 661 € 16 046 € 17 555 €
Average
pretax
income
Lower
disposable
income
threshold
Average
disposable
income
Lower net
wealth
threshold
Average net
wealth
Table E2. Detailed income distribution table (template table based upon data from France 2010)
Percentile p
Number of
adult
individuals
20-yr-+ in
percentile
Percentiles of factor
income
Percentiles of pretax
income
Percentiles of disposable
income
Percentiles of net wealth
Lower
factor
income
threshold
Average
factor
income
Lower
pretax
income
threshold
19 503 677 2 302 € 2 400 € 5 541 € 5 867 € 742 € 871 €
20 503 738 2 505 € 2 605 € 6 193 € 6 535 € 988 € 1 128 €
21 503 598 2 700 € 2 793 € 6 867 € 7 187 € 1 267 € 1 446 €
22 503 625 2 888 € 2 992 € 7 511 € 7 810 € 1 613 € 1 789 €
23 504 118 3 087 € 3 195 € 8 104 € 8 388 € 1 989 € 2 205 €
24 503 303 3 305 € 3 413 € 8 669 € 8 944 € 2 421 € 2 668 €
25 503 747 3 525 € 3 632 € 9 220 € 9 475 € 2 928 € 3 210 €
26 503 564 3 738 € 3 852 € 9 727 € 9 968 € 3 509 € 3 770 €
27 503 658 3 967 € 4 093 € 10 201 € 10 431 € 4 053 € 4 452 €
28 503 752 4 230 € 4 370 € 10 666 € 10 891 € 4 829 € 5 271 €
29 503 549 4 507 € 4 661 € 11 116 € 11 359 € 5 724 € 6 156 €
30 503 813 4 833 € 4 986 € 11 621 € 11 862 € 6 601 € 7 134 €
31 503 503 5 148 € 5 319 € 12 087 € 12 312 € 7 661 € 8 327 €
32 503 623 5 496 € 5 681 € 12 545 € 12 777 € 9 014 € 9 770 €
33 503 699 5 871 € 6 079 € 13 013 € 13 248 € 10 542 € 11 323 €
34 503 744 6 290 € 6 506 € 13 486 € 13 718 € 11 972 € 12 856 €
35 503 591 6 729 € 6 965 € 13 940 € 14 173 € 13 811 € 14 853 €
36 503 720 7 210 € 7 475 € 14 412 € 14 661 € 16 046 € 17 555 €
37 503 558 7 753 € 8 059 € 14 909 € 15 140 € 19 195 € 20 977 €
38 503 677 8 373 € 8 723 € 15 371 € 15 590 € 22 838 € 25 206 €
39 503 683 9 074 € 9 453 € 15 812 € 16 016 € 27 631 € 30 740 €
40 503 868 9 853 € 10 261 € 16 219 € 16 422 € 34 346 € 38 654 €
41 503 741 10 662 € 11 096 € 16 622 € 16 823 € 42 968 € 47 947 €
42 503 462 11 552 € 12 005 € 17 027 € 17 224 € 52 929 € 56 967 €
43 503 633 12 487 € 12 966 € 17 415 € 17 613 € 60 402 € 63 076 €
44 503 605 13 466 € 13 959 € 17 811 € 17 999 € 65 319 € 67 765 €
45 503 844 14 455 € 14 976 € 18 180 € 18 359 € 70 018 € 72 013 €
46 504 079 15 509 € 16 045 € 18 535 € 18 699 € 73 746 € 75 603 €
47 503 130 16 593 € 17 196 € 18 869 € 19 044 € 77 333 € 78 750 €
48 503 686 17 782 € 18 375 € 19 216 € 19 385 € 80 342 € 81 808 €
49 503 669 18 980 € 19 596 € 19 555 € 19 721 € 83 156 € 84 555 €
50 503 676 20 203 € 20 807 € 19 891 € 20 060 € 86 153 € 87 489 €
51 504 280 21 426 € 22 053 € 20 226 € 20 398 € 88 785 € 89 952 €
52 503 125 22 676 € 23 291 € 20 565 € 20 735 € 91 197 € 92 613 €
53 503 607 23 905 € 24 484 € 20 900 € 21 070 € 93 838 € 95 061 €
99.992 596 3 193 306 € 3 334 714 € 1 522 239 € 1 606 414 € 34 800 000 € 36 300 000 €
99.993 411 3 500 309 € 3 657 988 € 1 650 506 € 1 724 779 € 38 200 000 € 40 100 000 €
99.994 504 3 830 937 € 4 056 416 € 1 802 877 € 1 895 493 € 42 000 000 € 44 500 000 €
99.995 504 4 316 785 € 4 617 444 € 1 998 960 € 2 136 060 € 47 600 000 € 50 900 000 €
99.996 503 4 959 455 € 5 467 883 € 2 287 483 € 2 527 626 € 54 500 000 € 60 100 000 €
99.997 502 5 974 735 € 6 460 247 € 2 814 833 € 3 258 277 € 66 400 000 € 72 200 000 €
99.998 503 7 197 656 € 8 668 643 € 3 888 071 € 4 808 121 € 79 300 000 € 96 600 000 €
99.999 505 11 000 000 € 20 700 000 € 5 855 208 € 10 900 000 € 123 000 000 € 233 000 000 €

15. Most capital income is missed by tax data
0%
5%
10%
15%
20%
25%
30%
35%
1920 1925 1930 1935 1940 1945 1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010
%offactor-pricenationalincome
From tax-reported to total capital income
Didivends, interest, rents & profits reported on tax returns
Imputed rents
Retained earnings
Income paid to pensions &
insurance
Non-filers
&
unreported sole
prop. profits
Corporate income tax
2/3 missed by tax data

16. A growing fraction of labor income is
missed by tax data
50%
55%
60%
65%
70%
75%
80%
85%
90%
95%
100%
1953 1958 1963 1968 1973 1978 1983 1988 1993 1998 2003 2008 2013
%oftotalNIPAcompensationofemployees
From taxable to total employee compensation
Reported taxable wages
Health benefits
Employer payroll taxes
Other
Pension contributions1/4 missed by tax data

17. How we allocate taxes
We follow standard tax incidence results:
Labor taxes fall on labor; capital taxes on capital (and corporate
tax on all capital assets: Harberger 1962)
Reasonable if Y = F(K, L) has elasticity of substitution >>
labor supply elasticity eL and capital supply elasticity eK
Cross-country and time-series evolution of ↵ = rK/Y and
= K/Y broadly consistent with view that > 1 and eL and eK
relatively small in the long run eK
But this is uncertain ! will revisit if needed

18. How we construct micro-measures of
capital income matching macro totals
1. Construct micro-measures of wealth
Follow Saez and Zucman 2014: category by category, pragmatic
approach
Delivers micro-measures of family wealth matching macro totals
Split capital 50/50 among spouses
2. Derive micro-measures of pre-tax capital income
Compute aggregate pre-tax rates of return for each asset class
that reconcile NIPA income flows with Flow of Funds wealth
Apply these rates of return to individual assets

19. How we construct distributional estimates
of national labor income
1. Start from reported wages; split income of spouses using W2 forms
2. Employer payroll taxes: apply schedule, e.g., in 2015:
Medicare: 1.45%
Social Security: 7.2% capped at $118,500
Unemployment insurance: vary by state
3. Pension and health insurance contributions:
Available on W2 forms since 1999 for pensions, since 2012 for
health
Before, assume same distribution

20. National income is more concentrated
than tax income
25%
30%
35%
40%
45%
50%
55%
1917
1922
1927
1932
1937
1942
1947
1952
1957
1962
1967
1972
1977
1982
1987
1992
1997
2002
2007
2012
%oftotalincome Top 10% pre-tax income shares
IRS family market income
(Piketty-Saez)
National income per adult
(DINA)
This figure displays the share of total pre-tax national income earned by top 10% adult income earners and the share of total IRS
market income earned by top 10% family tax units. Source: Appendix Tables XX.

21. Less true for top 1%
0%
5%
10%
15%
20%
25%
1913
1918
1923
1928
1933
1938
1943
1948
1953
1958
1963
1968
1973
1978
1983
1988
1993
1998
2003
2008
2013
%oftotalincome
Share of national income earned by top 1% adult income earners
IRS family market income
(Piketty-Saez)
National income per adult
(DINA)
This figure displays the share of total pre-tax national income earned by top 1% adult income earners and the share of total IRS
market income earned by top 1% tax units. Source: Appendix Tables XX.

22. DINAs make it possible to compute
growth rates consistent with macro totals
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
1946
1950
1954
1958
1962
1966
1970
1974
1978
1982
1986
1990
1994
1998
2002
2006
2010
2014
Averageincomeinconstant2012dollars
Real average national income:
Full adult population vs. bottom 90%
Real values are obtained by using the national income deflator and expressed in 2012 dollars. Source: Appendix Tables
XX.
Bottom 90% adults
All adults
2.0%
2.0%
1.4%
0.7%

23. The top 10% has grown three times
faster than the bottom 90% since 1980
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
0
50,000
100,000
150,000
200,000
250,000
300,000
350,000
1946
1950
1954
1958
1962
1966
1970
1974
1978
1982
1986
1990
1994
1998
2002
2006
2010
2014
Bottom90%realaveragenationalincome
Top10%realaveragenationalincome
Real average national income of bottom 90% and top 10%
adults
Real values are obtained by using the national income deflator and expressed in 2012 dollars. Source: Appendix Tables
XX.
Bottom 90%
(right axis)
Top 10%
(left axis)
1.9%
2.0%
2.3%
0.7%