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Published: 20 May 2011

Lowering of income among the highest-income group reduced income differentials

Contraction of income differentials continued in 2009. According to Statistics Finland's income distribution statistics, the Gini coefficient was 25.9 in 2009, while one year previously it was 0.9 units higher. Income differentials contracted particularly at the highest-income end of the highest-income decile, because income measured by the mean of the top decile fell, but median income rose. In all other income deciles income grew.

Change in income of deciles measured by mean and median in 2009

The growth in current transfers received and the fall in taxes and other tax-like payments raised households' disposable income by 2.4 per cent in 2009. Current transfers received went up by nine per cent from the previous year. Of current transfers received, old-age pensions and unemployment security benefits grew in particular. The amount of taxes and tax-like payments fell by 4.8 per cent from the previous year.

Factor income received by households went down by 1.7 per cent from the previous year. Of factor income decreases took place in the wages and salaries (–1.7 per cent) and entrepreneurial income (–11.6 per cent) received by households. Property income without imputed net rents of owner-occupied dwellings went down by 14.8 per cent. However, imputed income from owner-occupied dwellings grew on account of lower housing loan interests by almost one quarter from 2008, which raised property income by 2.1 per cent.

Income grew in all deciles, whether measured by the median or mean, except for the highest-income decile. Measured by the mean of the highest-income decile, income decreased by around one per cent (EUR 710). Measured by the median, the income of the highest-income decile grew by over four per cent (EUR 1,970). The median describes the income of the middle observation of the decile. (Figure.)

The difference between the mean and median is explained by that income decreased in the very highest-income part of the highest-income decile. This lowers the mean of high-income groups, but does not affect the median, or the income of the middle observation of the decile. The mean of the income of the lowest-income group grew in relation as much as the median, around five per cent, but measured in euros, the growth (the mean EUR 500 and the median EUR 530) was more modest than in the other deciles.

The fallen income of the very highest-income part of the highest-income decile is visible in the decrease in the group's income share and Gini coefficient. The income share of the highest-income decile was 22 per cent in 2009, while one year previously it was 22.8 per cent. The value of the Gini coefficient was 25.9, which is 0.9 units lower than in 2008. The Gini coefficient gets values between 0 and 100, where 0 refers to fully equal income distribution and 100 that one income earner receives all the income. Both the Gini coefficient and the income share of the highest-income group fell now for the second successive year. The top year for the income share of the highest-income group and income differentials was 2007, when the income share was 23.9 per cent and the Gini coefficient 28.

The income share of the lowest-income decile rose from the previous year by only 0.1 percentage points, being four per cent in 2009. However, the income share of the lowest-income decile has fallen from the beginning of the 1990s, when it was 4.9 per cent. The income share has grown since 1990 in the two highest-income deciles and most in the highest-income decile. The income share of the two lowest-income deciles has fallen most.

In a comparison of 29 European countries, income differentials in Finland were the eighth lowest. According to the most recent international data, Finland is no longer a top country for growth in income differentials. In 2005–2009 income differentials remained nearly unchanged in Finland, the Netherlands and Greece. Income differentials diminished in 15 and grew in 11 countries. Income differentials contracted most in Poland, Ireland and Estonia, and grew most in Bulgaria, Romania and Denmark.

Income shares and mean income of deciles in 2009 and changes in income share 1990–2009

		I (lowest-income 10%)	II	III	IV	V	VI	VII	VIII	IX	X (highest-income 10%)
Income share in 2009, %		4.0	5.6	6.7	7.7	8.6	9.5	10.5	11.7	13.7	22.0
Change in income share, percentage points	1990–2009	-0.9	-0.9	-0.7	-0.5	-0.4	-0.4	-0.3	-0.1	0.3	3.9
	2000–2009	-0.3	0.0	0.1	0.2	0.3	0.3	0.2	0.2	0.3	-1.3
	2007–2009	0.1	0.2	0.2	0.3	0.3	0.3	0.3	0.1	0.1	-1.9
Mean of income, EUR		10,645	14,841	17,741	20,202	22,565	25,006	27,783	30,917	36,076	58,012
Median of income, EUR		11,318	14,865	17,756	20,238	22,591	24,995	27,783	30,782	35,840	48,674

Source: Income Distribution Statistics 2009, Statistics Finland

Inquiries: Hannele Sauli (09) 1734 3497, Kaisa-Mari Okkonen (09) 1734 3408, toimeentulo.tilastokeskus@stat.fi

Director in charge: Riitta Harala

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Appendix tables

• Appendix table 1. Income shares of decile groups (%) in 1966 - 2009. Decile groups have been formed among persons according to disposable income per consumption unit. (20.5.2011)
• Appendix table 2. Gini-coefficients for factor income, gross income and disposable income, and redistributive effect of current transfers on income differentials in 1966 - 2009. (20.5.2011)
• Appendix table 3a. Mean income by decile group in 1987 - 2009. Decile groups have been formed among persons according to disposable income per consumption unit. (20.5.2011)
• Appendix table 3b. Median income by decile group in 1987 - 2009. Decile groups have been formed among persons according to disposable income per consumption unit. (20.5.2011)
• Appendix table 4. Upper limit on income by decile group in 1987 - 2009. Decile groups have been formed among persons according to disposable income per consumption unit. (20.5.2011)
• Appendix table 5. Household income: structure by brackets ordered according to households' disposable income 2009. (20.5.2011)
• Appendix table 6. Household income: structure by brackets ordered according to households' gross income 2009. (20.5.2011)

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Updated 20.5.2011