Consumption inequality and publicly prouided seruices from local gouemment

Abstract

This study aims to identify how consumption inequality has evolved and how in-kind transfers, or publicly provided services, from local governments affect the level and trend in consumption inequality. We have imputed consumption from registry data in the period 2005 to 2018 based on the method presented by Fagereng & Halvorsen (2017). We have added the estimated in-kind transfers for each person to the imputed consumption, where the sum of these two equals extended consumption. This has been done by constructing a method of valuation and allocation of publicly provided services from local governments. The inequality measures used in this study are the Gini-coefficient and P90/P10, which is split into P90/P50 and P50/P10. We find that the average value of the Gini-coefficient from 2005 to 2018 is 0.2944 for imputed consumption and 0.2533 for extended consumption. The corresponding values for P90/P10 is 3.1 for imputed consumption and 2.36 for extended consumption. When measured by the Gini-coefficient, inequality has decreased by 2.35% from 2005 to 2018 for imputed consumption and 3.67% for extended consumption. The percentile measures of inequality are quite volatile and do not show a clear trend over time for imputed consumption. However, for extended consumption, P90/P10 shows a clear downward trend, with a 13.18% decrease from 2005 to 2018 (the corresponding change in P90/P10 for imputed consumption was a 2.36% increase). The findings indicate that including in-kind transfers significantly reduces the level of inequality, and that this reduction increased from 2005 to 2018.