Income differentials

Updated: 20 Dec 2017
Next update: 18 Dec 2018

The Gini coefficient is the most common indicator describing income differences. The higher value the Gini coefficient gets, the more unequally is income distributed. The biggest possible value for the Gini coefficient is one. Then the highest earning income recipient receives all the income. The smallest Gini coefficient value is 0, when the income of all income recipients is equal. In the income distribution statistics, Gini coefficients are presented as percentages (multiplied by one hundred). The Gini coefficient describes relative income differences. The Gini coefficient does not change if the incomes of all income earners change by the same percentage. The Gini coefficient is calculated based on the household-dwelling units’ disposable money income per consumption unit.

   

Income differentials stayed nearly unchanged in 2016

Statistics Finland's total statistics on income distribution show that income differentials stayed almost unchanged in 2016 compared with the previous year. Real income increased in all income deciles, but more for those with medium income than for those with high and low income. The average income of the lowest-income decile grew in real terms by 0.7 per cent and that of the highest-income decile by 0.3 per cent from 2015 to 2016. In other income deciles, the income level grew evenly by around one per cent.

During the 50-year period covered by the Income distribution statistics, income differentials are currently on level with the turn of the millennium and the early 1970s. The relative income differentials were at their lowest in the mid-1980s. In 2016, the Gini coefficient received the value 27.2, which was 0.1 percentage points lower than in the year before. Compared with 1995, the Gini coefficient has grown by around five percentage points, most of which is caused by income differentials growing fast in the late 1990s. The Gini coefficient gets the value 0 if everyone receives the same amount of income and 100 if one income earner receives all the income. The higher the Gini coefficient, the higher the income differentials are.