Distribution of income in Portugal

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The income distribution in Portugal considers the personal distribution of income in Portugal . The personal income distribution looks at how the income of an economy is distributed among individuals or groups (e.g. private households ).

The Gini index in Portugal was 33.5% in 2017. In an international comparison with the states of the European Union, Portugal was fifth from the bottom. This means that equivalised disposable incomes were very unevenly distributed in Portugal. However, income inequality, as measured by the Gini index, has tended to decrease in Portugal over the past few decades. However, the decline in inequality has flattened again in Portugal since 2010, which can be interpreted as a consequence of the euro crisis .

Distribution indicators - methods of representation

Various indicators and methods are used to measure the distribution of income in a country. The personal distribution of income is measured by Eurostat on the basis of the equivalised disposable income , which reflects the disposable income of the members of a household at the individual level. In addition, the Gini coefficient is used for international comparisons and OECD data is used to compare inequality between metropolitan regions within Portugal .

Nominal and real average and median income for Portugal according to Eurostat (2004-2017)

Average and median income

The average annual equivalent income in Portugal in 2017 was 10,863 euros, the median income in turn was 9,071 euros. Over time it can be seen that both the average income and the median income have increased nominally in the years since 2004 (valuation at current values). In addition, incomes fell in the years 2010–2014, during the years of the deep economic crisis in the southern EU member states, which also affected Portugal. Over the total period considered between 2004 and 2017, the average income rose by around 22% and the median income by around 31%. For the same period, the measured price increase is around 22%.

The adjusted ( HICP adjusted for inflation) and nominal mean income in Portugal rose steadily from 2004 to 2011. A downward trend can be seen from 2010 to 2014, probably caused by the economic crisis. The values ​​have increased again since 2014.

The median income (real and nominal) of the Spanish population also showed a positive trend from 2004 to 2010. The median income fell from 2010 to 2013. A positive development has been evident again since 2013.

Development of the Gini coefficient according to EU-SILC in Portugal, as well as the EU-27 average and its neighboring countries France and Spain (2004-2017)

Gini coefficient

In the early 2000s, Portugal had one of the highest Gini index values ​​in a European comparison. By 2010, however, this value had been reduced to the same level as that of other southern EU member states. The Gini index for Portugal fell from 37.8% in 2004 to 33.7% in 2010. In the years 2010 to 2014, the Gini coefficient rose again slightly. While countries like Spain have shown a steady increase in the Gini coefficient since 2010, the inequality measured in the Gini has decreased again in Portugal, especially from 2014. From 2014 to 2017, the coefficient finally decreased to 33.5%. (see also distribution of income in Spain , distribution of income in France ).

Looking at the OECD data for income distribution within Portugal, the redistribution of government measures such as taxes and transfer payments has played an important role in reducing inequality. While the Gini coefficient in Portugal for equivalised income before taxes was 53.2% in 2016, this value for income after taxes and transfers fell to 33.9%. Both Gini values, both before and after taxes and transfers, are nevertheless above the average for the EU-27 members.

Income quintile ratio (S80 / S20)

Development of the Gini coefficient of disposable income before and after taxes and transfers according to OECD data in Spain, France and Portugal, as well as the EU-27 average (2004-2017)
Development of the S80 / S20 income quintile ratio in Portugal and the EU-27 average (2004-2017)

The S80 / 20 income quintile ratio shows the ratio of the total income share of the 20% of the population with the highest income to that share of the 20% of the population with the lowest income. This ratio is 5.7 d for 2017. H. the 20% of the population with the highest incomes have an income around 6 times higher than the 20% of the population with the lowest incomes. The trend for this distribution measure is falling, however, in 2004 the value was still 7.0. In the past ten years, however, Portugal's quintile income ratio has always been well above the (weighted) EU average and thus shows higher income inequality than the EU average.

Top 10% income share

This indicator describes the share of the 10% of the population with the highest income in the total national equivalised income . In Portugal in 2017, the 10% of the population with the highest income received 26.1% of the total national equivalised income. In the weighted EU average, this share was 23.8% in 2017. This means that the top 10% of income earners in Portugal have relatively more than the EU-27 average and that income is thus more unevenly distributed.

Taking into account the distribution measures listed above, two clear trends can be determined: On the one hand, income in Portugal has tended to be more evenly distributed since 2004. On the other hand, the crisis years 2010 to 2014 and the associated austerity policy are reflected in the indicators.

Development of the top 10% share of total income in Portugal and the EU-27 average (2007-2017)

At-risk-of-poverty rate in Portugal

The at- risk-of-poverty rate describes what proportion of the population has an income below 60% of the national median income. In Portugal, this rate was 18.3% for 2017. Compared to other EU countries, Portugal performed relatively poorly with a place in the bottom third.

The at-risk-of-poverty rate before transfer payments was again 23.6% in 2017. The Portuguese welfare state can reduce the risk of poverty by around 22.5% through social transfers. However, with a welfare state expenditure ratio in Portugal close to the EU average, the reduction shows a relatively low value. The average reduction in the EU comparison is around 30%.

The reasons for the relatively high poverty rates are, among other things, inefficiently used social transfers. The expenditures for old age pensions and health, which also increase with age, are higher than average in the EU comparison. In contrast, spending on children, families and promoting social inclusion is low.

Education also plays an important role in that a higher level of education leads to higher incomes, which in turn is a factor in reducing poverty. In 2017, 52% of the working population of Portugal between 25 and 64 had a lower level of education than upper secondary level . Portugal ranks last in the OECD comparison. The OECD average is significantly lower at 21%. Portugal also ranks bottom in terms of the proportion of people with tertiary education.

year Average income Median income Gini coefficient S80 / 20 ratio Top 10%
2004 0€ 8,871 € 6,921 0.378 7.0 29.4%
2005 0€ 9,396 € 7,200 0.381 7.0 30.3%
2006 0€ 9,554 € 7,311 0.377 6.7 30.0%
2007 0€ 9,932 € 7,576 0.368 6.5 28.7%
2008 € 10,274 € 8,152 0.358 6.1 28.1%
2009 € 10,393 € 8,267 0.354 6.0 28.0%
2010 € 10,546 € 8,678 0.337 5.6 26.6%
2011 € 10,410 € 8,410 0.342 5.7 27.2%
2012 € 10,228 € 8,323 0.345 5.8 27.2%
2013 0€ 9,899 € 8,177 0.342 6.0 26.4%
2014 0€ 9,856 € 8,229 0.345 6.2 26.3%
2015 0€ 9,996 € 8,435 0.340 6.0 26.1%
2016 € 10,562 € 8,782 0.339 5.9 25.9%
2017 € 10,863 € 9,071 0.335 5.7 26.1%

Regional inequality

Disposable household income in Portugal by NUTS2 regions in 2016. The regions with the lowest incomes are in the north. The richest regions are around Lisbon.
Disposable household income in Portugal by NUTS2 regions in 2016, source: Eurostat

Regional inequality looks at the distribution of income or wealth in the various regions within a country. The NUTS2 regions with the lowest disposable incomes (11,600–12,460 euros) are located in the north and center of Portugal . Cities such as Porto or Coimbra are affected. The regions around Lisbon have the highest disposable incomes (15,040–15,900 euros) . The regions of Alentejo and Algarve in the south of Portugal have an average household income of between 12,460 and 13,320 euros and 14,180 and 15,040 euros, respectively. The Azores and Madeira (not visible on the attached map) are west of the mainland and have a disposable household income of between € 13,320 and € 14,180.

city Share of the total population (%) GDP per capita, real ($ in PPP ) GDP / capita in relation to national GDP / capita (%)
Coimbra 2.6 24,548 92
Lisbon 27.1 34,782 130.4
postage 12.3 24,819 93
Source: OECD, CITIES (2015)

The data in the table refer to 2015 and show the gross domestic product per capita in Coimbra , Lisbon and Porto . It is easy to see that Lisbon has the highest GDP per capita both in absolute terms and in relative terms compared to national GDP per capita. In general, it can be said that Lisbon has an above-average GDP per capita: it is 30 percentage points higher than the average GDP per capita of a Portuguese. Coimbra and Lisbon also have a similarly high economic output in absolute and relative terms.

gender gap

Income quintile ratio (S80 / S20) by gender

Development of income quintile ratios in Portugal broken down by gender according to EU-SILC (2004-2017)

The income quintile ratio indicates the ratio of the total income of the 20% of men or women with the highest income (top quintile) to the total income of the 20% of men or women with the lowest income (bottom quintile). Over time, it can be seen that the differences between the quintile ratios in Portugal are barely discernible, but the rank of the two ratios reversed in 2008/09, which means that there is now a higher inequality among men.

Gender Pay Gap in Portugal

The development of the gender pay gap in Portugal based on EU-SILC data for the private sector shows, in contrast to the EU-27 average, a strongly positive trend, with the Portuguese GPG starting significantly below the EU-27 average. In 2017, the GPG was 15.8%, which roughly corresponds to the EU-27 average.

Development of the gender pay gap in the private sector according to EU-SILC (2007-2017)

backgrounds

Portugal is one of those EU countries with high income disparities and poverty rates. However, due to the falling unemployment rate and the resulting increase in household income, the values ​​of the distribution indicators have improved significantly. Fiscal reforms, which have resulted in higher progressive tax rates, have also ensured that incomes are distributed more evenly. In addition, state transfer payments contribute to an increasing equal distribution. Above all, transfers that do not relate to pensions have a positive impact.

bibliography

  • JM Arnold, C. Farinha Rodrigues: Reducing Inequality and Poverty in Portugal. OECD Economics Department Working Papers, No. 1258, 2015. (papers.ssrn.com)
  • W. Baer, ​​DA Dias, JB Duarte: The economy of Portugal and the European Union: From high growth prospects to the debt crisis. In: Quarterly Review of Economics and Finance. Volume 53, No. 4, 2013, pp. 345-352. doi: 10.1016 / j.qref.2012.06.002
  • L. Correia: The European Crisis: Repercussions on the Portuguese Economy. In: Athens Journal of Mediterranean Studies. Volume 2, No. 2, 2016, pp. 129–144.
  • Thomas Goda, Özlem Onaran, Engelbert Stockhammer: A case for redistribution? Income inequality and wealth concentration in the recent crisis. CIEF Working Papers No. 14-17, 2014, pp. 14-17. doi: 10.13140 / 2.1.4656.3201

Web links

Individual evidence

  1. ↑ a b c d e Gini coefficient of equivalised disposable income Source: SILC [ilc_di12]. Retrieved May 7, 2019 .
  2. ↑ a b c d e Mean and median income by household type - EU-SILC survey. Retrieved January 27, 2019 .
  3. ^ Mean and median income by household type - EU-SILC survey [ilc_di04]. Retrieved May 7, 2019 .
  4. ↑ HICP (2015 = 100) - Annual data (average index and rate of change). Retrieved May 7, 2019 .
  5. ↑ a b c d Distribution of income according to quantiles - EU-SILC survey. Retrieved May 6, 2019 .
  6. ↑ Glossary: ​​Income quintile share ratio. Retrieved January 27, 2019 .
  7. ↑ a b c d e f S80 / S20 income quintile ratio by gender and by age group - EU-SILC survey. Retrieved October 27, 2019 .
  8. ↑ Rate of people at risk of poverty. Retrieved January 19, 2019 .
  9. ↑ At- risk-of-poverty rate before social benefits. Retrieved January 19, 2019 .
  10. ^ JM Arnold, C. Farinha Rodrigues: Reducing Inequality and Poverty in Portugal . Ed .: OECD Economics Department Working Papers. 2015.
  11. ^ Higher education still worth the money, new research suggests. Retrieved January 27, 2019 .
  12. ^ Adult education level. Retrieved January 19, 2019 .
  13. ^ Adult education level. Retrieved January 27, 2019 .
  14. ↑ Inequality in income distribution - S80 / S20 income quintile ratio - EU-SILC survey. Retrieved January 19, 2019 .
  15. ↑ Distribution of income by quantile - EU-SILC survey. Retrieved January 19, 2019 .
  16. ↑ a b Eurostat: Disposable income of private households by NUTS 2 regions [tgs00026]. In: Eurostat. Eurostat, 12 April 2019, accessed 9 May 2019 .
  17. ↑ a b OECD: Metropolitan Areas. In: OECD. OECD, accessed May 10, 2019 .
  18. ↑ Eurostat: Gini coefficient of equivalised disposable income Source: SILC) [ilc_di12]. Retrieved March 1, 2019 .
  19. ^ OECD: Reducing inequality and poverty in Portugal. Retrieved March 1, 2019 .