Noncash Income, Living Standards, Inequality and Poverty: Evidence from the Luxembourg Income Study

Abstract

Noncash income is defined in this paper to include the net value to individuals and families of education, health and housing benefits provided to them on a subsidised basis. These benefits may be provided by government, by employers or - in the case of imputed rental income on owner-occupied housing - by the household itself. This study estimates the value of these noncash benefits for seven countries (including Australia) using identical methods, and as far as practical, the same data sources. The estimates are then added to comparative measures of cash income produced as part of the Luxembourg Income Study (US) data base. Analysis is undertaken of the impact of noncash income on the relative living standards of different family types in each country, on the distribution of income and on the size and structure of relative poverty in each country. Sensitivity analysis is also undertaken in which the level of the poverty line is varied and its impact on poverty rates across families and across countries is ascertained. The main results of the study are summarised in a series of tables which detail its main finding that the impact of noncash income is best viewed in a life-cycle context, being greatest for families with children and for the elderly. The main groups whose relative position is worsened by the inclusion of noncash income are nonelderly single people and non-aged families without children.