INCOME DISTRIBUTION OFF MACROECONOMIC PERSPECTIVE

Personnel income distribution

Market income (primary income)

• earned income (wages and salaries)

• corporate income (interest, dividends,

Profit distributions, income from letting and leasing)

+ Social transfers from the state

• Statutory pensions

• Social transfers (social assistance, housing allowance, child support, supports

from the employment office, etc.)

= Gross income

– Tax and social contributions (transfers to the state)

• Direct taxes (income and corporate tax, wealth tax)

• Social security contributions (employee contribution to the pension, unemployed, Care insurance)

= Net income (secondary income)

Household equivalent income

– Demand weighted per capita income

• Comparison of the income situation of households of different

Size and composition

• Equal (“equivalent”) standard of living

– equivalence scale (“modified” OECD scale)

• Head of household: Demand weight 1

• Additional adult and children over 15 years: Weight requirement 0.5

• Children up to 14 years: weight requirement 0.3

– Example: conversion of household income into equivalised income …

• Two-person household (adult persons): 1.5 (= 1 + 0.5)

• Four-person household (parents, one 16- and 13-year-old child):

2.3 (= 1 + 0.5 + 0.5 + 0.3)

How to measure income inequality?

– Gini coefficient

• Normalized concentration measure (0 ≤ Gini ≤ 1)

• Sensitive to changes in the middle of the distribution

• Same numeric value for different distributions

– decile ratio

• Relation between deciles, e.g. P90 / P10, P80 / P20 (0 ≤ DV ∞)

• Neglecting “intermediate values” and margins of distribution

– Top income shares

• Measurement of income concentration by shares (0 ≤ TIS ≤ 1)

• Analysis of the high income area (World Wealth & Income Database)

– Further inequality measures

• Average and median income

• income quintile ratio (e.g., S80 / S20)

Mean Log Deviation (MLD), Theile Coefficient, Atkinson Measure

Reporting period for income measurement in EU-SILC is the entire calendar year preceding the survey. In addition to regular monthly income, income that is paid irregularly or only once a year (such as Christmas or holiday pay) is also taken into account. Household income is made up of the income of all household members who were paid over the course of a year and thus had an influence on the general financial situation of the household.