Income Inequality in the United States in Cross-National Perspective: Redistribution Revisited

Authors: Janet C. Gornick and Branko Milanovic

Institution: LIS Center Series

Date: May 2015

Introduction:

The LIS Database has long been used to assess income inequality across households, specifically the extent to which income distributions vary across countries and over time.

The LIS data are especially well-suited to assessing levels of redistribution, specifically redistribution carried out through income taxes and transfers – that is, through taxes paid out by households combined with transfers received by households. Researchers often capture levels of redistribution as the difference between inequality “before” and “after” these taxes and transfers are taken into account. The “before” measure accounts only for market income (“factor income” in the LIS lexicon), that is, income from labor and capital. The “after” measure corresponds to actual disposable household income (“dhi” in the LIS data), that is, market income plus income transfers received minus direct taxes paid out.

Link: Income Inequality in the United States in Cross-National Perspective: Redistribution Revisited (PDF)