1. Negative incomes

2. Negative incomes in SILC
Change in average Equivalised disposable income (HY020), if all negative incomes is set to 0.
Source: SILC 2013 UDB

3. What causes negative incomes
Capital losses (I.e. on stocks etc., when they are sold and the loss is realized)
Interest rate expenses
Losses for self-employed
Taxes, reimbursements etc.
Why so large negative incomes in Danish income statistics?
All mentioned types of negative income is too be reported to the tax department in the year they occur
They are fully included in the statistics for the year they occur

4. Primary cause of negative incomes
people live in families with negative incomes in 2013 in Denmark. Source: Full population income register

5. Primary cause of negative incomes – Weighted by amount. 2013
Total negative EQ. Disp. Income for the members of families was million Euros or Euros pr. person with negative income.

6. Then came the financial crisis…
OMXC – Danish stock index (1995=100)
Source: /

7. Time for testing!
How do introducing a cap on negative incomes change the story on danish inequality throughout the financial crisis?
Four gini series calculated on EQ. DISP. income. With application of different caps on negative income.
No cap
A cap at -1 mio. Euros
A cap at Euros
A cap at 0 Euros

8. The Gini-Coeffincient with caps on negative incomes
Source: Full population income register (National income def)

9. SILC – 2010 databreak Income callibration regime prior to 2010:
Split population and sample into income intervals.
Make sure there’s the same amount of people in each interval after callibration is done
Income callibration regime after to 2010:
Make sure there’s the same amount of people and same incomemass in each interval after callibration is done

10. Result of 2010 – calibration change
 Full coherence between the full population register and SILC when it comes to inequality and averages (If using the same income definition)  But... Comparability!
Source: SILC 2013 UDB

11. Danish 2014-revision
In the 2014 SILC-revision a cap on negative income, at Euros has been introduced into the calibration of SILC. Change in average Equivalised disposable income (HY020), if all negative incomes is set to 0.
Source: SILC 2013 UDB

12. The updated story on Danish inequality
Source: Full population income register (National income definition)

13. My recommendations
Introduction of some top/bottom-coding in the calculation of inequality indicators.
(OECD practice is to set all negative incomes to zero. This might be to drastic)
NSIs should still be able to report negative incomes in full. (For the benefit of researchers and not to interfere with calculation of income averages)
Practices on top/bottom-coding should be described in all the national quality-reports.

14. You wish to know more?
Contact: Jarl Quitzau, /