Table of contents
Preface                                                                                                                      iii
Acknowledgements                                                                                                     iv
Abbreviations                                                                                                              v
summary of chapters                                                                                                  xi
  
Chapter 1 introduction                                                                                                  1
 1.1    Aim of this Handbook                                                                                          1
 1.2    Why is income distribution important?                                                                   1
 1.3    Economic well-being                                                                                          2
 1.4    Household income as a microeconomic and a macroeconomic concept                  4
 1.5    Historical background                                                                                         6 

 Chapter 2 Standard concepts and definitions                                                                9
 2.1    Introduction                                                                                                      9
 2.2    The income concept                                                                                         9 
 2.3   Income components                                                                                          10
  2.3.1  Income from employment                                                                                11
  2.3.2  Property income                                                                                             13
  2.3.3  Income from household production of services for own consumption                   14
  2.3.4  Current transfers in kind                                                                                 15
  2.3.5  Social transfers received                                                                                16
  2.3.6  Exclusion from income                                                                                  16
 2.4  Income aggregation                                                                                          17
 2.5  Income and its relationship to the broader framework                                            18
  2.5.1  Introduction                                                                                                   18 
  2.5.2  Extension to consumption and capital accumulation                                          18
 
Chapter 3 income measurement                                                                                21
 3.1   Introduction                                                                                                     21
 3.2  Sources of household income statistics                                                               21
  3.2.1  Income surveys                                                                                             21
  3.2.2 Income data from registers                                                                              22 
 3.3  General measurement issues                                                                             24
  3.3.1  Measurement units                                                                                        24
  3.3.2  Reference periods                                                                                          26
  3.3.3  Population weighting                                                                                       27
  3.3.4  Benchmarking                                                                                                28
  3.3.5  Measurement errors                                                                                       29
 3.4  Practical guidance for the measurement of selected income receipts                       32
  3.4.1  Employee income in kind                                                                               33
  3.4.2  Income from self-employment                                                                         34
  3.4.3  Property income                                                                                            36
  3.4.4  Income from household production of services for own consumption                  36
  3.4.5  Current transfers                                                                                            41
  
Chapter 4 Data availability                                                                                          49
 4.1  Introduction                                                                                                        49
 4.2  Survey of Country Practices                                                                                49
  4.2.1  Robustness assessment                                                                                 49
  4.2.2  Data item inventory                                                                                         52
 4.3  Comparison of country practices between 2001 and 2010                                        54
 4.4  European Union Statistics on Income and Living Conditions(EU-SILC)                     54
 4.5  Practical definition of income for use in international comparisons                           56

Chapter 5 Quality assurance guidelines                                                                        57
 5.1  Introduction                                                                                                        57
 5.2  Quality assurance frameworks                                                                             57
 5.3  Quality assurance best practice                                                                            58
                
Chapter 6 Data analysis and dissemination                                                                  63
 6.1  Introduction                                                                                                       63
 6.2  Uses of income data                                                                                           63
 6.3  Units and populations                                                                                         64
  6.3.1  Units of analysis                                                                                             64
  6.3.2  Populations subgroups                                                                                    65
 6.4  Equivalence scales                                                                                            68
  6.4.1  Choice of equivalence scale                                                                            68
  6.4.2  Derivation of equivalised household income                                                       70
 6.5  Summary measures of income level                                                                       72
  6.5.1  Counts                                                                                                           72
  6.5.2  Means                                                                                                           72
  6.5.3  Medians                                                                                                        73
 6.6  Measures of income dispersion                                                                           73
  6.6.1  Frequency distribution                                                                                     73
  6.6.2  Quantile mearsures                                                                                        74
  6.6.3  Lorenz curves                                                                                                75
  6.6.4  Summary indicators of income dispersion                                                         78
 6.7  Income composition                                                                                           81
 6.8  Adjusting for price differences                                                                             84
  6.8.1  Adjusting for price changes over time                                                               84
  6.8.2 Adjusting for price differences across geographical areas of types of                 household                                                                                                             86
 6.9  Analysis of low income households and income poverty                                      88
  6.9.1  Introduction                                                                                                  88
  6.9.2  Income poverty approaches                                                                           88
  6.9.3  Static versus dynamic views                                                                          91
  6.9.4  Non-monetary measures of material deprivation                                               91
 6.10  Analysis at the top of the income distribution                                                     93
  6.10.1  Non-survey methods for measuring top incomes                                            94
 6.11  Best practice guidelines for dissemination of income data                                   96

Chapter 7 Comparing income distributions over time                                                  101  
 7.1  Introduction                                                                                                    101
 7.2  Undertaking cross time comparisons                                                                101
 7.3  Impact of measurement error                                                                            102
 7.4  Issues for the data originator                                                                            102
 7.5  Issues for secondary dataset producers                                                            104
 7.6  Issues for the end user                                                                                    106
  7.6.1  Detecting of changes                                                                                   106
  7.6.2  Significance of changes                                                                               108
  7.6.3  Trends versus episodes                                                                               108

Chapter 8 Income dynamics                                                                                    111
 8.1  Introduction                                                                                                    111
 8.2  Advantages and disadvantages of longitudinal data                                             111
 8.3  Examples of longitudinal income surveys                                                          113
  8.3.1  Survey of Labour and Income Dynamics (Canada)                                          113
  8.3.2  Panel Study of Income Dynamics (USA)                                                         114
  8.3.3  Survey of Income and program Participation (USA)                                          114
  8.3.4  European Union''s statistics on Income and Living Conditions (EU-SILC) 115 
 8.4  Some applications of longitudinal surveys                                                          115
  8.4.1  Households income dynamics and intergenerational mobility                           115
  8.4.2  Low income dynamics                                                                                 117
  8.4.3  Labor market dynamics                                                                                117

Chapter 9 Future directions for international work                                                         119
 9.1  Introduction                                                                                                     119
 9.2  Better informing analyses of economic well-being                                               119
 9.3  Household income, consumption and wealth framework                                       120

Appendix 1 Comparison of income definitions between 2001 and 2011 editions of the Canberra Group Handbook                                                                                       123
Appendix 2 Reconciliation of micro and macro approaches                                         129

Appendix 3 Survey of country practices for measuring household income :
 Robustness assessment                                                                                        139
  
Appendix 4 Survey of country practices for measuring household income :
Data item inventory                                                                                                  163

Appendix 5 Purchasing power parities                                                                       173

Bibliography                                                                                                           177

Index                                                                                                                     187

List of tables, figures and boxes             

Table 1.1 Brief history of household income measurement                                            6
Table 2.1 Income components in the conceptual and operational definitions                   11
Table 2.2 Extension to consumption and capital accumulation                                     19
Table 3.1 High income censorship due to processing limits                                         29
Table 3.2 Types of non-response                                                                             30
Table 4.1 Countries responding to the Survey of country practices                                51
Table 4.2 Income components collected in EU-SILC                                                   55
Table 4.3 Practical definitions of income for international comparisons                          56
Table 5.1 Dimensions of quality assurance frameworks                                              57
Table 6.1 Comparison of three commonly used equivalence scales                              70
Table 6.2 From gross income to person weighted equivalised disposable income          71
Table 6.3 Summary statistics of income dispersion                                                    80
Table 6.4 Comparison of alternative treatments of persons with zero equivalised                disposable household income                                                                                  81
Table 6.5 Distribution of household income, government benefits and taxes                   83
Table 6.6 Distribution of various household income measures n                                    83
Table 6.7 CPI differences for different households and locations                                    86
Table 6.8 Income growth and top incomes (a)                                                            94
Table 7.1 Weekly income, new and former bases (b)                                                  103

Appendix 1
Table 1 Classification of income components: 2001 CGH - 2011 CGH                             126
Table 2 Classification of income components: 2011 CGH - 2010 CGH                            127
 

Appendix 2
Table 1 Micro and macro household income concepts and measurement                    130
Table 2 SIH and selected ASNA household income, (b)                                              137
Table 3 Concordance between SIH and selected ASNA income items (a)                     138

Appendix 3
Table 1 Main source of information                                                                          140
Table 2 Scope and coverage                                                                                   143
Table 3 Units                                                                                                         146
Table 4 Income recording                                                                                       148
Table 5 Non-response rates for the main income components (%)                             150
Table 6 Editing and imputation                                                                                 152
Table 7 Dissemination                                                                                            154
Table 8 Websites for additional information                                                                156

Appendix 4
Table 1 Data item inventory: Summary of country practices                                       164
Table 2 Data item inventory: Individual country practices                                           166
Table 3 Countries that participated in the 2010 Survey of Country Practices                  172


Figure 3.1 The 2011 CGH conceptual definition of production of services 
       for own consumption and the SNA Production boundary                                     37
Figure 3.2 Private and final income, by private income quintile                                    47
Figure 4.1 Survey of Country Practices: Proportion of countries collection detailed
       income components (a)                                                                                 53
Figure 6.1 Average equivalised disposable household income by life cycle stage        67
Figure 6.2 Distribution of equivalised disposable household income                           74
Figure 6.3 Lorenz curves: example 1                                                                      76
Figure 6.4 Frequency distributions                                                                         76
Figure 6.5 Lorenz curves: example 2                                                                     77
Figure 6.6 Cash benefits and household taxes as a proportion of disposable                  household income                                                                                                82
Figure 7.1 Trends in income inequality: Examples of data interpretations issues         107
Figure 7.2 Trends in income inequality: Index of Gini coefficients in country Z (a)       107
Figure 7.3 Trends in income inequality: (Gini coefficients): Average annual percentage         change over time                                                                                                 108
Figure 7.4 Trends in income inequality: Index of Gini coefficients (a)                         109


Box 3.1 Examples of using administrative data                                                       23
Box 3.2 Definition of household                                                                             25
Box 3.3 Example of censorship of income values during processing                         29
Box 3.4 Examples of imputation methods for partial non-response                            31
Box 3.5 Examples of collection issues for inter-household transfers                          43
Box 3.6 Excerpt from Growing Unequal?                                                                 44
Box 3.7 Government benefits, taxes and household income in Australia                     47
Box 5.1 EU-SILC quality reports                                                                             62
Box 6.1 Definitions of analytical units                                                                      64
Box 6.2 Definitions of household types used in Australia                                            67 
Box 6.3 Spatial price indexes in Canada                                                                 87 
Box 6.4 Millennium Development Goals on global poverty                                          91
Box 6.5 Some approaches to measuring economic hardship                                     92
Box 6.6 Standard methodology for calculation of top income shares 
from tax return        data                                                                                       95
Box 7.1 Examples of income data changes                                                            103