Deriving Long-Run Inequality Series from Tax Data: An Australian Case Study Andrew Leigh * Prepared for presentation to the Australian Social Policy Conference University of New South Wales, Sydney 9 July 2003 Abstract Prior to the last three decades, regular surveys on household income were rare or non- existent in many developed countries, making it difficult for economists to develop long-run series on income distribution. Using taxation statistics, which tend to be available over a longer time span, I propose a method for imputing the incomes of non-taxpayers, and deriving the underlying distribution of income. Applying this method to Australia, I develop a new annual series for male inequality since 1941. Inequality among adult males fell during the 1950s and 1970s, and increased throughout the 1980s and 1990s – a pattern similar to the United Kingdom. On average, income taxation reduced the gini coefficient by 4 points, becoming substantially more progressive in the early-1970s. JEL Classification: C81, D31, H23 * PhD student, John F. Kennedy School of Government, and Doctoral Fellow, Malcolm Wiener Center for Social Policy, Harvard University. Web: www.ksg.harvard.edu/students/leighan . Email: andrew_leigh@ksg02.harvard.edu . Thanks to Anthony Atkinson, Macgregor Duncan, George Parsons, Justin Wolfers, and James Vickery for stimulating discussions, and David Ellwood, Caroline Hoxby, Christopher Jencks, and Jeffrey Williamson for comments on an earlier draft.