2. Income and Wealth

The mean household net adjusted disposable income per capita was around USD 28 000 in 2017 in OECD countries, on average. This is based on a measure from the System of National Accounts (SNA), and reflects income after taxes and current transfers, as well as in-kind services that households receive for free or at subsidised prices from governments and non-profit institutions (for more details please refer to Box 2.1). The figure was lowest in Mexico and Latvia (at around USD 17 000) and highest in the United States and Luxembourg (where it exceeded USD 42 000). Since 2010, OECD average household net adjusted disposable income per capita has increased by 6%, cumulatively (Figure 2.2). Gains since 2010 have been largest in Estonia (up 29%, cumulatively), followed by the other Baltic States and Korea (26-27%). At the same time, the figure has fallen in Italy and, especially, in Greece, where it has dropped by -23% (i.e. by USD 5 500).

Data describing the distribution of the SNA measure of household adjusted disposable income (above) are still experimental, and available only for a limited number of countries. However, information on the distribution of household disposable income (a more restricted income concept that does not account for social transfers in kind), “equivalised” (i.e. “adjusted” by an equivalence scale to account for economies of scale in the household) is available from the OECD Income Distribution Database, which is based on national household surveys and administrative records (for more on all this see Box 2.1). These data suggest that, on average among OECD countries, the income of those in the top 20% of the distribution is 5.4 times higher than that of the bottom 20% (Figure 2.3). Inequalities are smallest in some Central and Eastern European countries (i.e. the Czech Republic, the Slovak Republic, Slovenia) as well as in Iceland, Denmark, Finland and Belgium, where the ratio never exceeds 4. Conversely, in Chile, Mexico and the United States, people in the top 20% of the income distribution receive between 8 and 10 times more than what is received by the bottom 20%. Compared to 2010, the ratio was broadly stable on average across OECD countries, although it fell by 1.2 points in Estonia and Mexico and almost 1 point in Chile, while it increased by almost 1.8 points in Lithuania.

Relative income poverty, defined as a disposable income below half the national median, affects 12% of people in OECD countries, on average (Figure 2.4). The share is lowest (below 6%) in Iceland, the Czech Republic and Denmark, and highest (above 17%) in Israel, the United States, Korea and Turkey. Compared to 2010, income poverty rates have remained broadly stable in the majority of OECD countries. However, the rate increased by 4 percentage points in Latvia and Lithuania, and fell by 2 percentage points in Mexico, Chile and Australia. These changes in relative income poverty reflect year-on-year changes in national median income – thus, in countries where national income has been rapidly rising (e.g. Latvia and Lithuania), the poverty threshold has risen with it, while in countries where national income has fallen (e.g. Greece and Italy) the poverty threshold has fallen with it. Changes in income poverty anchored to a specific year (e.g. 2005) are larger and affect more countries (OECD, 2015[1]).

A different perspective on the economic strain experienced by households is provided by (self-reported) data on people who find it difficult to make ends meet. Based on this measure, which is available only for European countries, 21% of people have difficulty or great difficulty in making ends meet on average (Figure 2.5). This rate is well above the share of people counted as poor, based on the relative income poverty threshold (Figure 2.4), with the difference between the two measures ranging from less than one percentage point in Finland to 60 percentage points in Greece. Compared to 2010, the share of people who find it difficult to make ends meet has fallen by almost 7 percentage points on average in European OECD countries, with the largest decreases in Latvia and Hungary (more than 20 points). By contrast, it has increased by almost 16 percentage points in Greece.

Household wealth is the difference between all financial and non-financial assets (such as dwellings, land, currency and deposits, shares and equity) owned by households and all their financial liabilities (such as mortgages and consumer loans). This measure is reported for the household exactly in the middle of the distribution (with 50% of households having wealth above, and 50% below, the median). On average, among OECD countries, median wealth per household is around USD 162 000. Values range between less than one-fifth of the OECD average in the Netherlands, Latvia and Denmark, to almost three times the OECD average in Luxembourg (Figure 2.6). The variation in median wealth levels across countries is strongly related to outright homeownership rates (i.e. the share of people who own their homes without mortgage debt), as well as to the existence of generous social security benefits in old age. When compared to households’ relative position in terms of their mean disposable income (Figure 2.2), median wealth per household is relatively low in Denmark, the Netherlands and the United States – countries where the share of people who own their homes outright is among the lowest in the OECD (Balestra and Tonkin, 2018[2]). Since 2010, median wealth has fallen by 4% (about USD 6 000) across OECD countries, on average. It has increased the most in Chile (32%), largely driven by rising real-estate prices (Balestra and Tonkin, 2018[2]), followed by Canada (16%), Germany and the United States (13%), mainly reflecting higher financial wealth (Balestra and Tonkin, 2018[2]). The largest fall since 2010 occurred in Greece (-41%), followed by the Slovak Republic (-25%), Italy and Spain (-19%), mainly reflecting falls in the value of real-estate wealth (Balestra and Tonkin, 2018[2]).

The distribution of household wealth is much more concentrated than that of household income. Among OECD countries on average, the wealthiest 10% of households own 52% of total household net wealth (Figure 2.7). This ranges from 34% in the Slovak Republic to nearly 80% in the United States. While these differences partly reflect the accuracy of measures for the top end of the distribution, which is challenging to measure particularly when using household surveys (Balestra and Tonkin, 2018[2]), alternative (tax-based) sources also suggest that wealth inequality is significantly higher in the United States than in Europe (Alvaredo et al., 2017[3]).

Across the 28 OECD countries with available data, 36% of people are financially insecure (Figure 2.8) – i.e. while not currently income poor, they risk falling into this condition in the event of a sudden loss of income, e.g. through unemployment, family breakdown or disability. In other words, if their income were to suddenly stop, such people would not have enough liquid assets to keep living above the poverty line for more than 3 months (see Box 2.1 and the figure note below for further details). More than half of the population meets this definition of financial insecurity in Latvia, Greece, Slovenia, New Zealand, Chile and Poland. By contrast, only 4% of people in Korea, and fewer than 15% in Japan, are financially insecure.

Strictly speaking, the income and wealth profiles of different population groups (defined based on their gender, age or education) cannot be assessed for the indicators considered in this chapter because the data are collected at the household level. Survey data usually provide information on the composition of a household (e.g. by gender and age), but not on how income and wealth are distributed across the members of that household. An implicit assumption made when reporting household-level data is that of a full and equal sharing of resources across all household members. When working with such data, the only insights into inequality that can be gained concern the different average characteristics of households (i.e. the average for households that include people aged 65+ and those that do not), or households headed by different individuals (such as men and women, young and old, and people of differing levels of education). This risks substantially under- or over-estimating the size of the gaps between these different groups. Results are also shaped by complex factors, such as the demographic structure of a country, and the types of households that are more prevalent (for example, households headed by single parents are generally more economically disadvantaged than other types of household, and their prevalence varies across OECD countries). Beyond the immediate measurement challenges, the concept of “personal” income or wealth is not simple to define, as some income and wealth components belong to the entire household (e.g. social transfers and taxes, which are typically paid or received according to the type of household considered, e.g. number of children), while others are individually held. The income inequalities described below refer to individuals grouped by age (whatever the household they belong to), while wealth inequalities refer to the age and the educational level of the household reference person.

When compared to children and young people (aged below 26) and to older adults (aged 51 and above), middle-aged people (26-50 years) live in households with higher equivalised disposable income, and are less likely to be income-poor. In OECD countries, on average, both children and young people, on one side, and older adults, on the other, live in households where equivalised disposable income is, respectively, 10% and 4% lower than the average household equivalised disposable income for middle-aged people. Young people and older adults are also, respectively, 35% and 20% more likely to live in an income-poor household.

In terms of wealth, households headed by people aged 55 and older have higher household median wealth and are less likely to be financially insecure (i.e. at risk of falling into poverty if they had to forgo 3 months of income). The median wealth of households with heads aged 55 and older is 53% higher than that of those headed by the middle-aged (in this case 35-54 years), while the median wealth of households headed by individuals aged under 35 is around one-third of that of households headed by middle-aged individuals. Households headed by older people are also 25% less likely to be financially insecure, relative to those headed by middle-aged individuals, while households headed by under-35s are 7% more likely to be financially insecure.

Median wealth in households headed by individuals without a tertiary education is, on average, around half that of households headed by a person with a tertiary education. More specifically, median wealth values for the OECD on average stand at USD 91 000 for households headed by a person with below upper secondary education; USD 130 000 for households headed by a person with upper secondary education only; and USD 203 000 for households headed by a person with a tertiary education.

Rates of financial insecurity also vary according to the highest educational attainment level of the household head. On average across 28 OECD countries, the share of financially insecure households is 36% for those headed by a person with less than an upper secondary education; 37% for those headed by a person with an upper secondary education only; and 26% for households headed by a person with a tertiary education.


[3] Alvaredo, F. et al. (2017), World Inequality Report 2018, World Inequality Lab, Paris, https://wir2018.wid.world/files/download/wir2018-full-report-english.pdf (accessed on 9 October 2019).

[2] Balestra, C. and R. Tonkin (2018), “Inequalities in household wealth across OECD countries: Evidence from the OECD Wealth Distribution Database”, OECD Statistics Working Papers, No. 2018/01, OECD Publishing, Paris, https://dx.doi.org/10.1787/7e1bf673-en.

[8] OECD (2017), How’s Life? 2017: Measuring Well-being, OECD Publishing, Paris, https://dx.doi.org/10.1787/how_life-2017-en.

[6] OECD (2017), OECD Income Distribution Database TERMS OF REFERENCE, http://oe.cd/idd (accessed on 22 November 2019).

[1] OECD (2015), In It Together: Why Less Inequality Benefits All, OECD Publishing, Paris, https://dx.doi.org/10.1787/9789264235120-en.

[7] OECD (2013), OECD Guidelines for Micro Statistics on Household Wealth, OECD Publishing, Paris, https://dx.doi.org/10.1787/9789264194878-en.

[4] Stiglitz, J., J. Fitoussi and M. Durand (eds.) (2018), For Good Measure: Advancing Research on Well-being Metrics Beyond GDP, OECD Publishing, Paris, https://dx.doi.org/10.1787/9789264307278-en.

[5] United Nations Economic Commission for Europe (2011), Handbook on Household Income Statistics Second Edition, United Nations, http://unece.org/fileadmin/DAM/stats/publications/Canberra_Group_Handbook_2nd_edition.pdf (accessed on 19 July 2019).

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