Differences in Income Distribution Estimates Due to Using Administrative Records

Abstract

Statistics Korea (KOSTAT) based the production of its income distribution measures on the Household Income and Expenditure Survey (HIES) until before 2016. HIES had been persistently criticized for having omitted high-income households while including cases of underreported income, thereby underestimating the actual state of income inequality. Considerable dispute was occasioned as the disposable income Gini turned out to be higher when calculated based on the Survey of Household Finances and Living Conditions (SHFLC), which was first conducted in 2012, than on HIES. In December 2017, KOSTAT began producing its income distribution measures based on the SHFLC data combined with administrative records. In what follows, income data drawn from SHFLC will be referred to as “survey data”, and “survey data supplemented with administrative information” as “combined data.”