The Impact of Housing Non-Cash Income on the Unconditional Distribution of Household Income in Austria

37 Pages Posted: 19 Aug 2014

See all articles by Pirmin Fessler

Pirmin Fessler

Oesterreichische Nationalbank (OeNB)

Miriam Rehm

Independent

Lukas Tockner

Independent

Date Written: August 5, 2014

Abstract

We estimate non-cash income from owner occupied housing, subsidized rental housing, or free use of one's main residence and evaluate their impact on the unconditional distribution of household income and selected inequality measures. We confirm the standard finding in the literature that imputed rents accruing to home owners have an equalizing effect on the distribution of income and find similar evidence for non-cash income from subsidized rents. Whereas imputed rents equalize the upper part of the income distribution, subsidized housing has an equalizing effect on the lower part of the income distribution. Overall, the effect of non-cash income from owner occupied housing clearly dominates the distributional effects, which translates into a combined effect of around 15% higher income for the bottom half and around 10% for the upper half of the unconditional income distribution. Our data provide us with the rare opportunity to apply all three commonly used approaches to calculate imputed rents for owner occupiers: capital-, self-assessment and equivalent rent approach. We find that using the equivalent rent approach leads to the strongest reduction in income inequality.

Keywords: income distribution, household main residence, housing policies, imputed rent, non-cash income, subsidized rent

JEL Classification: D12, D14, D31

Suggested Citation

Fessler, Pirmin and Rehm, Miriam and Tockner, Lukas, The Impact of Housing Non-Cash Income on the Unconditional Distribution of Household Income in Austria (August 5, 2014). ECB Working Paper No. 1718, Available at SSRN: https://ssrn.com/abstract=2476374 or http://dx.doi.org/10.2139/ssrn.2476374

Pirmin Fessler

Oesterreichische Nationalbank (OeNB) ( email )

Otto-Wagner-Platz 3, PO Box 61
Vienna,
1010 Vienna, A-1011
Austria

Lukas Tockner

Independent ( email )

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