Income differentials

Updated: 18 Dec 2018
Next update: 18 Dec 2019

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 grew in 2017

Statistics Finland's total statistics on income distribution show that income differentials grew in 2017 compared with the previous year. Real income increased in all income deciles, but more for those with high income than for those with medium and low income. The income level of the population's highest-income decile rose by 4.4 per cent in real terms from 2016 to 2017. The income of medium income earners (income deciles V to IX) increased by 1.3 per cent and the income of the four lowest income deciles by 1.2 per cent. The income level of the lowest-income decile grew by 2.2 per cent.

In 2017, the Gini coefficient describing relative income differentials received the value 27.7, which was 0.5 percentage points higher than in the previous year and almost on level with 2010. Compared with 1995, the Gini coefficient has grown by around 5.5 percentage points. Most of this is caused by the fast growth of income differentials at the end of the 1990s. The income differentials have been at their lowest in the mid-1980s. 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 bigger the relative income differentials are.