Income inequalities are one of the most visible
manifestations of differences in living standards within each country. High income
inequalities typically imply a waste of human resources, in the form of a large share
of the population out of work or trapped in low-paid and low-skilled jobs.
Income is defined as household disposable income
in a particular year. It consists of earnings, self-employment and capital income and
public cash transfers; income taxes and social security contributions paid by
households are deducted. The income of the household is attributed to each of its
members, with an adjustment to reflect differences in needs for households of
different sizes (i.e. the needs of a household
composed of four people are assumed to be twice as large as those of a person living
Income inequality among individuals is measured
here by four indicators. The Gini coefficient is based on the comparison of cumulative
proportions of the population against cumulative proportions of income they receive,
and it ranges between 0 in the case of perfect equality and 1 in the case of perfect
inequality. The P90/P10 ratio is the ratio of the upper bound value of the ninth
decile (i.e. the 10% of people with highest income)
to that of the first decile; the P90/P50 ratio is the ratio of the upper bound value
of the ninth decile to the median income; and the P50/P10 ratio is the ratio of median
income to the upper bound value of the first decile.
Data used here were provided by national experts
applying common methodologies and standardised definitions. In many cases, experts
have made several adjustments to their source data to conform to standardised
definitions. While this approach improves comparability, full standardisation cannot
be achieved. Also, small differences between periods and across countries are usually
Results refer to different years. “Late-2000s”
data refer to the income in 2008 in all countries except Japan (2006); Denmark,
Hungary and Turkey (2007); and Chile (2009). “Mid-1990s” data refer to the income
earned between 1993 and 1996. “Mid-1980s” data refer to the income earned between 1983
and 1987 in all countries for which data are available except Greece (1988); Portugal
(1990); and the Czech Republic (1992). “Mid-1980s” data refer to the western Lander of
Germany. “Late-2000s” data for Austria, Belgium, Ireland, Portugal and Spain are based
on EU-SILC and are not deemed to be fully comparable with those for earlier years.
For non-OECD countries, 2008/9
Gini coefficients are not strictly comparable with OECD countries as they are based on
per capita incomes except India and Indonesia for which per capita consumption was
There is considerable variation in income
inequality across OECD countries. Inequality as measured by the Gini coefficient
is lowest in Slovenia, Denmark and Norway and highest in Chile, Mexico and Turkey.
It is above-average in Israel, Portugal and the United States, and below-average
in the remaining Nordic and many Continental European countries. The Gini
coefficient for the most unequal country (Chile) is double the value of the most
equal country (Slovenia). Overall, the different measures of income inequalities
provide similar ranking across countries.
From the mid-1980s to the late-2000s,
inequality rose in 15 out of 19 countries for which longer-run data are available.
The increase was strongest in Finland, New Zealand and Sweden. Declines occurred
in France, Greece, and Turkey. Income inequality generally rose faster from the
mid-1980s to the mid-1990s than in the following period.
differences in mind, non-OECD countries have higher levels of income inequality
than OECD countries, particularly in Brazil and South Africa.