Applying generalized pareto curves to inequality analysist

A generalized Pareto curve is defined as the curve of inverted Pareto coefficients b(p), where b(p) is the ratio between average income or wealth above rank p and the p-th quantile. We present this concept and show how it can be used to better estimate distributions, especially from tax tabulations. By providing a simple decomposition of top shares, we discuss how studying inverted Pareto coefficients can improve the understanding of inequality dynamics. We also show how it helps to better analyze wealth and income concentrations along the distribution, using data for France, Spain, the United States, and China

Who does and doesn't pay taxes?

We use administrative tax data from audits of self‐assessment tax returns to understand what types individuals are most likely to be non‐compliant. Non‐compliance is common, with one‐third of taxpayers underpaying by some amount, although half of aggregate under‐reporting is done by just 2% of taxpayers. Third party reporting reduces non‐compliance, while working in a cash‐prevalent industry increases it. However, compliance also varies significantly with individual characteristics: non‐compliance is higher for men and younger people. These results matter for measuring inequality, for understanding taxpayer behaviour, and for targeting audit resources