Distribution of income in Austria

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The distribution of income in Austria considers the personal distribution of income in Austria. When analyzing the distribution of income, a distinction is generally made between the functional and the personal income distribution discussed here. The personal income distribution looks at how the income of an economy is distributed among individuals or groups (e.g. private households ), regardless of the source of income from which it originates. The distribution of personnel is mostly measured by Eurostat on the basis of available equivalised income. In 2017 which amounted Gini coefficient of 0.28 Austria, Austria therefore occupies in comparison to the other Member States of the European Union to 9th place .

Distribution measures

Data situation and income concept

To calculate the various indicators, Eurostat uses the EU-SILC household survey. The available equivalised income is used as the basis for this. The equivalised disposable income is defined by Eurostat as "the total income of a household after taxes and other deductions available for spending and saving, divided by the number of household members, converted into adult equivalents [...]." For Austria, EU-SILC- Data available from 2003 onwards.

Development of the Gini coefficient of disposable income and market income according to OECD and Eurostat data for the years 2007 to 2015.

Gini coefficient of income

Development of the Gini coefficient of income in comparison with Austria, Italy, Germany and the EU27 average.

Income distributions can be described using a wide variety of indicators. The most well-known statistical measure of income distribution is the Gini coefficient , also known as the Gini index. This coefficient can have values ​​between 0 and 1, where 0 describes a perfect equal distribution (all people receive the same income) and 1 describes perfect inequality (one person receives the entire income).

When looking at the evaluated data, it is noticeable that the Gini coefficient of the various types of income hardly changes over time. There is little difference between the lowest point of disposable income (OECD / IDD) of 0.276 and the highest point in 2009 of 0.289. What is striking, however, is that the Gini index of market income (OECD / IDD) in 2015 was 0.495 and was thus almost halved (by 0.206 points) through redistribution. This can be interpreted as a measure of the effectiveness of government redistribution ( progressive tax system and transfer payments).

A comparison with the average Gini coefficient of the EU27 states shows that Austria has always been below this average since records began in 2005. In 2017, the difference to the EU27 countries was 0.028 points. Austria is also below the Gini values ​​of its neighboring countries Germany and Italy , which is the only country in this diagram that is consistently above the EU27 average. Although the data for Austria are already available for 2018, the comparative values ​​for the other countries are still missing in order to draw further parallels.

Since 2008, compared to 2006, the Gini index has consistently been higher. This jump can be attributed to a break in the time series.

Average and median income

Mean and median income in Austria 1995–2018; adjusted using harmonized consumer price index (2015 = 100)

Further indicators that are suitable and common for international comparison are the distribution measures mean (also called average income) and the median of incomes (also called mean income). In Austria, the nominal average income in 2017 was 27,629 euros, the median income was 24,752 euros. If one looks at the nominal average income over the period 1995 to 2017, one can see a positive trend. While the average income in 1995 was around 16,000 euros, it rose to around 27,500 euros in 2017. A similar development can be observed for nominal median income, in 1995 it was around 14,000 euros and climbed to around 24,500 euros in 2017.

If one now looks at real average and median incomes - i.e. adjusted for the harmonized index of consumer prices (HICP) - one can also see increasing real incomes over the period 1996–2017, which, however, are significantly lower in comparison due to inflation. In 1996 the real average income in Austria was around 23,000 euros; by 2017 it had risen to around 27,000 euros. The development of the real median income, which was around 21,000 euros in 1996 and increased to around 24,000 euros in 2017, provides a similar picture.

What both approaches (real and nominal) have in common is that the median is smaller than or below the mean of the distribution. One can therefore speak of a right-skewed distribution of income in Austria.

Income quintile ratio (S80 / S20)

Development of the income quintile ratio broken down by gender.

The income quintile ratio S80 / S20 describes the ratio of the total income of the top 20% (top quintile or 80th  percentile ) to that of the bottom 20% (bottom quintile or 20th percentile) of the income distribution. As with the other indicators, the equivalised disposable income is used as the starting point.

When looking at the data from the EU-SILC survey, it can be seen that the values ​​of women and men run almost parallel over large areas. In 1995 the value of men was 4.1 points and that of women 4.0 points. This means that men in the top quintile earn 4.1 times more income than men in the bottom quintile. For the group of women this means four times the income of the top quintile compared to the bottom quintile. From this point on, the income quintile ratio falls, with a brief interruption, to a value of 3.4 points for both genders by the year 2000. From there on, the values ​​increase over the years, with the exception of 2004, 2005, 2006 and 2009, until they reach 4.4 points in 2010 for the men and 4.3 points for the women achieve the highest value of the current data situation. In 2017, the value was back at the same value as in 2010. A slight decrease can be observed in 2018: The income quintile ratio for men is 4.1 points, that of women 4.0 points, so these values ​​reflect the ratios of the year 1995 reflected.

An interpretation according to which one gender consistently has a higher income quintile ratio cannot be made on the basis of the available data. Depending on the point in time, it is either the men or the women who show higher values. However, the differences are largely minimal.

Gender Pay Gap

Development of the gender pay gap over the years 2008 to 2017 compared with the EU27 average.
Development of the top 10% share of total income in Austria and the EU-27 average (2005-2017)

The gender pay gap , usually called the gender pay gap , illustrates the differences in income between men and women. The gender pay gap was also determined with the EU-SILC data collection according to NACE2 sectors for all member states of the European Union .

From the survey it can be seen that the gender pay gap , starting with a value of 25.1%, will decrease continuously in the sectors of industry, construction and services until 2017. In 2017, the gender pay gap in these sectors was 19.9%, a difference of 5.2 percentage points. This means that women earn an average of 19.9% ​​less than their male colleagues at this point.

The survey also shows that the gender pay gap in Austria is well above the EU27 average. In 2008 this was 17.3%, which corresponds to a difference of 7.8 percentage points. Although this gap has been reduced over time, it was still 3.8 percentage points in 2017. Compared to other European countries, Austria has above-average values. (See for example: Distribution of income in Hungary ).

Rate of people at risk of poverty and social exclusion

The at- risk-of-poverty rate for Austria was 14.4% in 2017. At risk of poverty are those people whose income is less than 60% of the median equivalised income (i.e. after social transfers). The at-risk-of-poverty rate is subject to small fluctuations in the period from 2003 to 2017, with the exception of a rapid increase in the crisis year 2008. However, this increase can also be attributed to a break in the Eurostat data series.

Share of income in the top 10%

The income share of the top 10% describes the share of the top decile (i.e. the top 10% earners) in total income. In Austria, this value was 22.4% in 2017. This means that the top 10% of income earners receive around 22% of total income. If one looks at the development of the income share of the top decile over time between 2005 and 2017, it is relatively stable without major fluctuations (fluctuation range: around 1%). The share of the top 10% is still below the EU27 average, which is around 24% over the same period. However, additional sources of income (such as: from assets) should also be taken into account, which are traditionally under-recorded in surveys.

Income Distribution Indicators in Austria
year Average Median Gini coefficient S80 / S20 At-risk-of-poverty rate (in
%) 		Revenue share
of the top 10% (in%)
2003 17,566 15,630 0.27 4.1 13.2 22.4
2004 18.602 16,864 0.26 3.8 13.0 21.3
2005 19,797 17,758 0.26 3.8 12.6 21.9
2006 19,684 17,854 0.25 3.7 12.6 21.0
2007 20,342 18,156 0.26 3.8 12.0 21.9
2008 21,681 19,413 0.28 4.2 15.2 22.3
2009 22,756 20,469 0.28 4.2 14.5 22.6
2010 23,576 21,058 0.28 4.3 14.7 22.9
2011 23,922 21,463 0.27 4.1 14.5 22.1
2012 24,423 21,807 0.28 4.2 14.4 22.1
2013 24,366 22,073 0.27 4.1 14.4 21.7
2014 26,080 23,211 0.28 4.1 14.1 22.6
2015 25,958 23,260 0.27 4.0 13.9 22.3
2016 26,054 23,694 0.27 4.1 14.1 22.0
2017 27,629 24,752 0.28 4.3 14.4 22.4

Regional inequality

Disposable household income by federal state per person and year in purchasing power standards (PPS) . (2016).
This graphic shows the estimated proportion of the population at risk of poverty or social exclusion in Austria in 2016 (in percent)

Income in Austria is regionally unevenly distributed. In general it can be observed that the real available household income in the north of Austria is higher than in the south of Austria. Vienna is to be seen as an exception here. Disposable household incomes were highest in Lower Austria and Vorarlberg in 2016, at around 22,900 and 22,600 purchasing power standards (PPS), respectively . These incomes were lowest in Vienna and Carinthia , at PPS 20,900 and PPS 21,000, respectively.

The population of Austria threatened by poverty or social exclusion is also geographically unevenly distributed. In general, it can be stated here that the east of Austria is less at risk of poverty than the west. Here, too, Vienna is an exception, as this is where the highest risk of poverty of the population in Austria is assumed (26.7%). The lowest risk of poverty is found in Lower Austria (12.6%).

If you compare the most important metropolitan regions of Austria ( Vienna , Linz and Graz ), you can see that these metropolitan regions show the same Gini coefficient of 0.3 for 2015, which indicates an approximately equal distribution or unequal distribution of the respective incomes in these regions. The national Gini coefficient of 0.27 for 2015 is in line with these Gini coefficients.

If one considers the proportion of the population that has less than 60% of the median income at their disposal, this is also the same in the three metropolitan regions and is around 10% of the population. These values ​​roughly correspond to the national at-risk-of-poverty rate of 13.9%.

However, the metropolitan regions differ in terms of the real household income available per inhabitant in USD ( purchasing power parity ). In Vienna the average household has the lowest income of $ 28,725 per inhabitant, in Graz the average household already has $ 30,441 per inhabitant and in Linz even over $ 32,032 per inhabitant. Compared with the real disposable household income for the whole of Austria ($ 35,653.3), however, all metropolitan regions (Vienna, Graz and Linz) are below the national average.

For other metropolitan regions, such as Salzburg or Innsbruck , no data is available for this period that would allow a further spatial comparison.

Indicators of inequality in metropolitan areas
city Share of total population ( 2015) Disposable real household income per inhabitant in USD (2016) Gini Index (2015) Relative poverty line ( 60%) (2015)
Vienna 32.5% 28,725 0.3 0.1
Linz 7.3% 32,032 0.3 0.1
Graz 4.9% 30,441 0.3 0.1

backgrounds

The inequality indicators are relatively stable for Austria over time. The Gini coefficient has changed only insignificantly in the last 15 years. These small changes can be explained, among other things, by a change in employment behavior (trend towards part-time work) and an increase in unemployment - i.e. due to changed structures. Employment behavior and unemployment are also responsible for the sometimes considerable gender differences in income distribution.

Furthermore, an income tax reform was carried out in Austria in 2015 and 2016. According to an analysis by the budget service of the Austrian parliament from 2015, the relief of the available equivalent household income amounted to 829 euros (around 3.3%). However, a large part of the total relief volume (around 52.6%) was accounted for by the top three deciles of the income distribution. Furthermore, because of their different employment behavior, men tended to benefit more from the relief than women.

According to a study by WIFO from 2016, Austria has a high redistribution potential of the state due to its high tax rate of 40.8% and a government expenditure ratio of 53%. However, this study also points out that the tax system only redistributes to a small extent, whereas welfare and welfare state benefits clearly have a redistributive effect. The lower income groups in Austria benefit from the latter. The WIFO authors also go into the different developments in primary and disposable income: The reasons for the primary income tending towards more inequality are persistently high unemployment, the structural change from high-wage industries to service sectors with comparatively lower wages and the increase of atypical employment.

The latter statements also suggest that the consideration of the wage share is essential for an analysis of income distribution . The report by the Austrian Ministry of Social Affairs from 2016 shows that the wage share adjusted for top salaries has continuously declined in both Austria and the EU15 since the late 1970s. Above all, technological changes towards capital-intensive production methods as well as negative effects of economic globalization processes on the position of employees are seen as causes. This development is complementary not only with the findings of WIFO, but also with the high income in the financial sector. In a broader sense, this means that it is essential for the distribution of Austrian income whether households receive wage income, income from self-employment or income from capital. While wage incomes are still distributed relatively evenly, a contrary picture emerges with profit (or operating) and capital income. These are mainly concentrated at the top of the distribution - the top 1%. An intergenerational analysis also shows that “wealth transfers via inheritances will increase from 12 billion euros annually (2015) to over 20 billion euros (2035) over the next two decades (Humer 2014). “This situation also presents the Austrian tax system in its design - relieving the labor factor / burdening the capital factor - with new challenges.

In this context, it is also relevant that household surveys, such as those of the EU-SILC and the HFCS (Household Finance and Consumption Survey), enable a more comprehensive analysis than individual tax statistics, since all sources of income are taken into account. This applies above all to the expansion of the analysis of income distribution to include that component of property income. It shows that income from assets as additional income to gainful employment has only a very small influence or contribution for the majority of the Austrian population. A livelihood through income from assets is therefore only possible for the top percentiles in Austria (!) This means that they benefit significantly more from their capital income than the rest of the population. Despite this finding, the general problem of household surveys remains empirical underreporting at the edges of the distribution.

bibliography

  • Wolfgang Kitterer : Income concepts in empirical studies on tax incidence. In: Mohr Siebeck GmbH & Co. KG (Ed.): FinanzArchiv / Public Finance Analysis. 2nd Edition. New Series, Vol., No. 39, 1981, pp. 323-343.
  • Christl, Michael, and Lorenz, Hanno. 2015. “Of Poverty, Inequality and Distribution”, Agenda Austria, Association for Scientific Dialogue and Social Renewal.

Individual evidence

  1. ↑ Definition: personal income distribution. Retrieved August 19, 2019 .
  2. ↑ a b c d Gini coefficient of equivalised disposable income - EU-SILC survey. In: Eurostat Database. Retrieved January 18, 2019 .
  3. ↑ Glossary: ​​Disposable equivalised income. Retrieved January 19, 2019 .
  4. ↑ a b c Gini coefficient of equivalised disposable income - EU-SILC survey [ilc_di12]. Retrieved May 8, 2019 .
  5. ↑ a b Income Distribution and Poverty - OECD Income Distribution Database. Retrieved May 8, 2019 .
  6. ↑ a b c d e Average and median income by age and gender - EU-SILC survey. Eurostat Database, accessed on 18 January 2019 .
  7. ↑ a b HICP (2015 = 100) - Annual data (average index and rate of change) [prc_hicp_aind]. EUROSTAT, accessed on May 7, 2019 .
  8. ↑ S80 / S20 income quintile ratio according to gender and age group - EU-SILC survey [ilc_di11]. Retrieved May 8, 2019 .
  9. ↑ a b S80 / S20 income quintile ratio by gender and by age group - EU-SILC survey. In: Eurostat Database. Retrieved January 18, 2019 .
  10. ↑ a b c Gender-specific earnings gap, without adjustments, according to NACE Rev. 2 activity - methodology: wage structure survey - EU-SILC survey [earn_gr_gpgr2]. Retrieved May 8, 2019 .
  11. ↑ Eurostat_ilc_di01. Retrieved May 8, 2019 .
  12. ↑ a b c Rate of people at risk of poverty by at-risk-of-poverty line, age and gender - EU-SILC survey. Eurostat Database, accessed 19 January 2019 .
  13. ↑ a b c Wilfried Altzinger, Stefan Humer, Mathias Moser: Chapter 13 Development and distribution of income. In: Social report - Social policy developments and measures 2015-2016. Federal Ministry of Labor, Social Affairs, Health and Consumer Protection, accessed on May 8, 2019 .
  14. ↑ Distribution of income by quantile - EU-SILC survey. Eurostat Databank, accessed 19 January 2019 .
  15. ↑ a b Disposable income of private households, by NUTS 2 regions. EUROSTAT, accessed on May 7, 2019 .
  16. ↑ a b Population at risk of poverty or social exclusion by NUTS regions. EUROSTAT, accessed on May 7, 2019 .
  17. ↑ a b c d e f g Metropolitan areas. OECD, accessed May 4, 2019 .
  18. ^ Household disposable income. OECD, accessed May 7, 2019 .
  19. ↑ a b Markus Marterbauer, Alois Guger: Long-term trends in income distribution in Austria - an update: The distribution of income and assets . No. 307 . WIFO Working Papers, 2007 ( online [accessed January 19, 2019]).
  20. ↑ Analysis of the tax reform 2015/2016. Retrieved January 19, 2019 .
  21. ↑ a b Silvia Rocha-Akis, Jürgen Bierbaumer-Polly, Martina Einsiedl, Alois Guger, Michael Klien, Thomas Leoni, Hedwig Lutz, Christine Mayrhuber: Redistribution through the public budgets in Austria. (PDF) Retrieved February 26, 2019 .
  22. ^ Household Finance and Consumption Survey. Retrieved January 19, 2019 .
  23. ↑ Stefan Humer, Mathias Moser, Matthias Schnetzer, Michael Ertl, Atila Kilic: Income Distribution in Austria - A Comparative Analysis of Microdata Sets . In: Department of Economics and Statistics of the Chamber for Workers and Salaried Employees for Vienna (Ed.): Materials on Economy and Society No. 125 . Vienna 2014, ISBN 978-3-7063-0475-7 , pp. 39 .
  24. ↑ a b Stefan Humer, Mathias Moser, Matthias Schnetzer, Michael Ertl, Atila Kilic: About the importance of capital income for the distribution of income in Austria . In: Economy and Society . tape 39 , 2013, ISSN  0378-5130 , p. 571-586 ( online [accessed January 19, 2019]).