The Use of Distributional National Accounts in Better Capturing the Top Tail of the Distribution

This article explains how the compilation of distributional results in line with national accounts’ totals may assist in overcoming some of the challenges faced by micro data statistics in measuring inequality, including capturing the top tail. As national accounts rely on a harmonised system of concepts and definitions in which multiple data sources are brought together in order to arrive at comprehensive, coherent and consistent results, they may capture elements that may be missing from underlying statistics and may provide more reliable estimates for items that may be more prone to quality issues in underlying statistics. This implies that aligning micro data to national accounts totals may improve the overall quality of distributional results, mainly depending on the way in which any gaps between the micro and macro data are allocated to underlying households. This article provides an overview of possible underlying reasons for the micro-macro gaps, including the issue of the missing rich, and provides guidance on how to deal with them in order to arrive at the best possible distributional results.