line with Kézdi(2002), who based on micro data also documents a steady increase in skill premium for 1986-1995 as a consequence of inter-sectoral skill reallocation and dramatic jobs losses of the unskilled less educated people, and an even higher skill premium growth for the second half of the ’90s with skill biased technological change at most sectors.
The comovement between the skill premium and the top shares suggests that wage-setting decen-tralization favoring the remuneration of skills also play a role in the increase of the top income shares, beside other documented forces such as increased bargaining power of top managers, decreased top tax rates (Piketty et al. (2014)), and increased importance of capital income (Piketty (2013)).
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A Appendix for Chapter 1
A.1 Data description
The study is based on administrative tax return data located at the Hungarian Central Bank, covering the universe of double-entry bookkeeping companies for years between 2002 and 2013.1 The dataset reports very detailed information, including figures in all cells reported on the XX29 tax form and its appendix balance sheet and profit and loss statement submitted to the National Tax and Custom Office (NAV, formerly APEH). The data structure is unbalanced panel including about 200-400 thousand observations each year. Both those firms with tax year defined as the fiscal year ending 31th December, and also those few hundred firms with tax year ending on different dates are included.
The data has been subject to cleaning containing the below steps. The two digit levelindustry codesystem changed in 2003 and also in 2008. Concordance tables for major NACE/TEAOR changes have been provided by the CSO.
Two main problems have to be handled with the number of employees data. First, decimal digit error typos, then missing data. It is assumed that the wage bill is reported more precisely and frequently compared to the number of employees data. The first problem is solved by comparing the average wage at a given firm to the average wage at similar size firms in the same industrial sector during that given year. In case of large differences (more than 30 times jump or drop) the number of employees is corrected based on the reported employment data during the preceding and succeeding year of that firm. Then the average wage dynamics is checked within the firm. In case of large changes within years, the employment data is corrected based on reported data in the neighboring years. Finally missing employment data is linearly interpolated.
Investment data is not reportable on the tax form, hence it is calculated based on the usual capital accumulation formula:
It=Kt−Kt−1+δt
where K is the nominal capital amount, and δ is the accounting based amortization reported on the balance sheet. The calculated book value capital is the sum of the reported nominal tangible and intangible assets. In case if these are not reported, then capital is approximated by the net value of property, machines and intangible assets.
1From 2003 more than 97 percent of corporations have practiced double-entry bookkeeping in Hungary, while for years before the ratio was less than 75 percent. For the main results I only use data from years where the dataset includes more than 97 percent of all corporations.
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