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Citation Information

Type Working Paper - Policy Research Working Paper
Title Is inequality underestimated in Egypt? Evidence from house prices
Publication (Day/Month/Year) 2016
URL http://documents.worldbank.org/curated/en/588041468195577344/pdf/WPS7727.pdf
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 for urban Egypt is found to increase
from 36 to 47 after correcting for the missing top tail.

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