Capéau, Decoster, Sheikh Hassan and Vanderkelen (2023), Distributional National Accounts for Belgium

Capéau, B., Decoster, A., Sheikh Hassan, N. and Vanderkelen, J. (2023), Distributional National Accounts for Belgium, BE-PARADIS Working Paper 23.6

Belgium often stands out as an exceptional case in comparative studies on both the level and the evolution of inequality. Contrary to the rise in income inequality in many OECD countries, publicly available sources mostly report a rather stable and low level of income inequality in Belgium between the mid 1980’s and mid 2010’s. In this paper, we reconsider the evolution of income inequality in Belgium between 1995 and 2019 by applying the methodology of Distributional National Accounts (DINA) as  documented in Alvaredo et al. (2021). We construct DINA by inserting the distributional information from the two main survey datasets (ECHP and SILC) into the income information contained in the National Accounts. This allows to identify the role of important missing or incompletely reported income components as an explanatory factor for the perceived stability of inequality.

Our preliminary results highlight the importance of calibrating the distributional information contained in the survey data to the National Accounts aggregates. Especially after the financial crisis we find that the DINA-approach unveils a previously undetected rise in Belgian income inequality. Remarkably, the timing of the turning point in the evolution of inequality depends on the income concept. For pre-tax income we find a rise in inequality since 2010. For post-tax and transfer disposable income, the increase only starts in 2014.