Abstract/Summary

Chile’s Casen household survey (Encuesta de Caracterización Socioeconómica Nacional) is the basic instrument for measuring the sources and levels of income and living conditions in the country. The survey, carried out every two or three years, provides the income and employment data used in the construction of social welfare indicators, such as poverty headcounts and inequality measures of income distribution. The raw data, however, are adjusted to bring national aggregates, such as total income earned by self-employment, into line with totals in national accounts. Nevertheless, the literature indicates that household surveys and national accounts offer inconsistent measures when counting the poor or assessing income inequality. Indeed there is no reason to privilege national accounts over household surveys in the analysis of poverty and the incomes of the poorest. Using the Casen 2011, this study assesses the impact of income adjustments on the poverty headcount. It finds that using adjusted incomes underestimates poverty relative to using unadjusted incomes (nationally, 14.45% versus 16.25%); moreover, this underestimation is greater for the self-employed and the indigenous in rural areas.