Imputed Rent and Income Distribution

This paper uses unit record survey data to implement a 1977 United Nations recommendation that imputed rent from owner‐occupied housing be included in household income in statistics collected for income distribution purposes. The conceptual difficulties associated with employing the recommended National Accounts approach are highlighted by a comparison of the methodologies used to impute housing income for National Accounts purposes, for use in income distribution analyses and for income taxation purposes. The empirical difficulties associated with implementing the preferred approach are also discussed. The results reinforce the significant impact owner‐occupation has on the well‐being of many households and point to the importance of a disaggregate analysis of its distributional impact.