The name is absent

Comparable Indicators of Inequality Across Countries

2. Household Income

Income inequality is most often studied in terms of household income. As brought out in the review of inequal-
ity measurement by Jenkins and van Kerm (2009) - on which we draw heavily - there are arguments for focusing
on consumption expenditure rather than income in assessing economic welfare, but the common practice is to rely
on income. We focus first on the definition and measurement of income and the issues that arise in that context,
then turn to the time period covered, the income recipient unit and how a household is defined, and the unit of
analysis.

Definition of Income

The core income concepts involved are market, gross and disposable income, which are defined as follows:
• Market income is the sum, across all household members, of gross (usually excluding employer social
insurance contributions) labour market earnings from employment or self-employment, together with
income from savings and investments such as rent, interest and dividends.

• Gross income adds to market income cash transfers from the state such as social insurance or social assis-
tance benefits, together with any private transfers received from other households such as gifts, alimony,
or child support payments.

• Disposable (or net) income deducts from gross income the direct taxes and social insurance contributions
paid, as well as any private transfers made to other households.

Striving towards agreement on the definition of income across statistical agencies has been the topic of various
studies and reports, most recently from the Expert Group on Household Income Statistics (The Canberra Group),
whose 2001 Report represents the current consensus. This has major implications for comparative analysis of in-
come inequality. In an EU context in particular, the EU-SILC data-gathering framework now producing compara-
tive data on incomes and living conditions across the Union seeks to adhere as closely as possible to the Canberra
Group recommendations on the definition of household income. However, this is not necessarily true of national
sources or of data previously gathered in the European Household Community Panel (ECHP), on which compara-
tive analysis for earlier periods has to rely, and in practical application issues of data quality and availability still
have to be faced. In addition, there is no one income concept or measure that suits all purposes: as the Canberra

Page • 11

<<   8   9   10   11   12   13   14   >>

More intriguing information