Income Inequality Considering the Cost of Living. An Admin-Data Approach Studying the Swiss Case

Abstract

Cost of living is an important aspect of economic well-being, which is often neglected in inequality studies. Based on a Gini decomposition using admin data, this study estimates the relevance of minimum and average cost of living in Switzerland in relation to inequality and highlights the significance of direct taxes, everyday goods, housing, and health care premiums. Cost of living significantly increases disposable income inequality. Regional differences exist, which are primarily attributed to the design of welfare instruments.