inequalities between households in the national accounts: breakdown of household accounts maryse...

Inequalities between households in the national accounts:

Breakdown of household accounts

Maryse FESSEAUFrance – Insee

National Accounts Department

Inequalities between households in the national accountsInsee 2009, November 6

Reconciling macro-economic figures and public’s perception

› Moati P., Rochefort R. « measuring purchasing power », Conseil d’Analyse Economique – Report to PM - 2008

› Quinet A. « measuring households’ purchasing power », Report to Minister of Finance - 2008

› « Stiglitz » commission on the « measurement of economic performance and social progress »

recommandation : breaking down macro-economic figures to take into account disparities between households

› Beginning of the project : mid-2007

First published results : mid-2009


Two different worlds : micro and macro data

› Income and consumption : two types of information available

› Building a bridge between these two approaches to break down households’ account by household categories

Households’ account(MACRO SOURCE)

- « mirror » construction - exhaustiveness- harmonised framework

Households’ surveys(MICRO SOURCE)

- direct information- specific surveys - individual information


Presentation in three parts :

1. Breakdown of household accounts using surveys : scope, classification and methodology

2. Results published : disposable income, consumption expenditure and savings rate by household categories

3. A new step : adjusted disposable income and actual consumption by household categories


Part 1:

Breakdown of household accounts using surveys : scope, classification and

methodology


Amount in € b illion

Household accounts…includes ordinary

households - mainland (excl. Fisim)

Disposable income (1) 1 042,7 993,4Consumption expenditure (2) 878,3 821,2

Redistribution of income in kind account

Social transfers in kind (3) 267,2 229,5Adjusted disposable income = (1)+(3) 1 309,9 1 222,9Actual consumption = (2)+(3) 1 145,5 1 050,7

› The framework of analyses : national accounts, 2003› A breakdown using five surveys, for ordinary households

– mainland France

› 4 classification variables : standard of living, household composition, employment status or age of the head of the household

Breakdown of ordinary household accounts for the year 2003 using five surveys (1/3)

Source: National accounts 2003 – Base 2000, Insee


›Comparison of estimates coming from different data sources

› Some imputations on micro data (imputed rents, financial revenues, public education expenditure,…)


Source: Insee, National accounts 2003, SILC 2004, Tax income 2003 and calculations by the authors.

Some components of disposable income, in € billion

Household accounts (1)

Surveys (SILC, Tax income)

(2)

Coverage rate (2)/(1)

Self-employed primary incomes 101,4 46,1 45%Wages and salaries (in cash and in kind) 602,9 542,0 90%Employers'social contributions 220,1 187,0 85%Property income 83,1 15,9 19%Taxes on income and other current taxes 137,7 113,5 82%Social benefits (in cash) 295,5 234,1 79%



› Breakdown for each component of incomes and consumption, using distribution coming from micro data and benchmarking aggregates on national account figures

-> Wages and salaries by age of the head of the household:

Source: Insee, National accounts 2003, SILC 2004, Employment survey 2003, housing satellite account 2003 and calculations by the authors.

Under 30 30-39 40-49 50-59 60-69 Over 70All

households

Average wages and salaries per household - in € , SILC - (1)

18 584 30 216 33 141 31 983 6 694 820

Number of households, Employment survey and the housing satellite account - (2)

2 579 555 4 700 635 4 892 086 4 670 405 3 224 444 5 123 843

Overall total, in € billion - (1)*(2)=(3) 47,9 142,0 162,1 149,4 21,6 4,2 527,3

Readjustment coefficient - (4) 1,14

Adjusted overall total, in € billion - (3)*(4)=(5) 54,8 162,4 185,4 170,8 24,7 4,8 602,9


Part 2:

Results published : disposable income, consumption expenditure and savings rate

by household categories


Results according to standard of living

› Standard of living defined as income level per consumption unit (CU)

›Households distributed in five equal groups on an increasing scale

Disposable income of the most well-off households is five times higher than that of the least well-off

Scope : ordinary households resident in mainland France, excl. Fisim.Source : Insee, national account 2003, SILC2004, Tax Income 2003, Household Budget 2006, housing and health surveys, calculations by the authors.

Q1 Q2 Q3 Q4 Q5All

households

Average disposable income per CU - in € 10 100 16 400 21 000 26 800 50 000 24 900

Total - in € billion 78.7 130.3 169.2 218.0 397.3 993.4

Q5/Q1 = 5.0


6794 102 104

89 93

12 14

15 13

-27-40 -46 -51 -49 -46

53

3530

28 28 31

6

9

17 9

-100

-50

0

50

100

150

200

Q1 Q2 Q3 Q4 Q5 All households

Wages and self-employed income Dwelling services incomeFinancial income Taxes and social contributionsSocial benefits and transfers

The 20% richest households receive 40 % of the total amount of disposable income

Scope : ordinary households resident in mainland France, excl. Fisim.Source : Insee, national account 2003, SILC2004, Tax Income 2003, Household Budget 2006, housing and health

surveys, calculations by the authors.

Index 100 for disposable income

78.7 B€ 130.3 B€ 159.2 B€ 218.0 B€ 397.3 B€ 993.4 B€


Ratio Q5/Q1 lower on average consumption expenditure than on disposable income

Consumption expenditure by standard of living quintile in 2003

Scope : ordinary households resident in mainland France, excl. Fisim.Source : Insee, national account 2003, SILC2004, Tax Income 2003, Household Budget 2006, housing and health surveys,

calculations by the authors.

Q5/Q1 = 3.3

Q1 Q2 Q3 Q4 Q5Average

share

Annual consumption expenditure per CU, in € 9 900 15 400 19 800 24 400 33 100 20 600

% of consumption expenditureof which : Food and non-alcoholic drinks 20 17 16 14 12 15 Leisure and culture 7 9 9 10 11 10


The savings rate increases with income level, negative on average for the poorest

-11%

3%7%

10%

36%

1%6% 6%

9%

34%

-20%

-10%

0%

10%

20%

30%

40%

50%

Q1 Q2 Q3 Q4 Q5

Average savingsrate : 17 %

Scope : ordinary households resident in mainland France, excl. Fisim.Source : Insee, national account 2003, SILC2004, Tax Income 2003, Household Budget 2006, housing and

health surveys, calculations by the authors.

Savings, in % of disposable income


-20%

-10%

0%

10%

20%

30%

40%

50%

Single persons Single-parent families

Couples - no child

Couples - one child

Couples - 2 children

Couples - 3 children or more

-20%

-10%

0%

10%

20%

30%

40%

50%

Under 30 30-39 40-49 50-59 60-69 Over 70

The youngest and single-parent families benefit from private transfers between households

Before private transfers

After private transfers

Savings rate :

Scope : ordinary households resident in mainland France, excl. Fisim.Source : Insee, national account 2003, SILC2004, Tax Income 2003, Household Budget 2006, housing and health surveys, calculations by

the authors.


Part 3:

A new step to measure how social transfers in kind reduce inequalities : adjusted disposable income and

actual consumption by household categories


Main components of social transfers in kind

› Transfers in kind for ordinary households in 2003 – 229,5 billions of €– 9 100€ per household– 5 800€ per consumption unit (CU)

› Health care reimboursements and education represent the three quarters of transfers in kind;

Source :national accounts – Base 2000

Year 2003 Billions of € %Health care goods & services 97,8 43Education 75,1 33Social care 12,8 6Recreational & culture services 16,5 7Housing 10,2 4Other transfers in kind 17,1 7Total 229,5 100


› From 5.0 to 3.2 regarding adjusted disposable income

› From 3.3 to 2.2 regarding actual consumption

Social transfers in kind reduce inequalities

Adjusted disposable income by standard of living quintile in 2003

Scope: ordinary households resident in mainland France, excl. Fisim.Source : Insee, national account 2003, SILC2004, Tax Income 2003, Household Budget 2006, housing and health surveys, calculations by the authors.

.

Actual consumption by standard of living quintile in 2003

Average annual amount per CU, in euros

Q1 Q2 Q3 Q4 Q5 Q5/Q1 All households

Disposable income (1) 10 100 16 400 21 000 26 800 50 000 5,0 24 900Social transfers in kind (2) 7 400 5 900 5 400 5 000 5 100 5 800Adjusted disposable income = (1)+(2) 17 500 22 300 26 400 31 800 55 100 3,2 30 700

Average annual amount per CU, in euros

Q1 Q2 Q3 Q4 Q5 Q5/Q1 All households

Consumption expenditure (1) 9 900 15 400 19 800 24 400 33 100 3,3 20 600Social transfers in kind (2) 7 400 5 900 5 400 5 000 5 100 5 800Actual consumption = (1)+(2) 17 300 21 400 25 100 29 400 38 200 2,2 26 400


Redistribution in the national accounts framework

Primary income (incomes from economic activity and assets) (1)

Contributions and taxes (2)

Benefits and other transfers in cash (3)

Disposable income (4) = (1) - (2) + (3)

Social transfers in kind (5)

Adjusted disposable income (6) = (4)+(5)

Redistribution


A picture of redistribution : the least well-off are the main beneficiaries


Transfers in % of primary income


The health care expenses are the highest part of social transfers in kind but the education expenses are a bit more discriminating:


Income agregates distribution according to standard of living quintile in 2003

In % (All households = 100)

Q1 Q2 Q3 Q4 Q5All

householdsTotal

(in billions €)Primary income (1) 5 12 17 24 42 100 1 140,2Disposable income (2) 8 13 17 22 40 100 993,4Social transfers in kind (3) 25 21 19 18 18 100 229,5

of which : health 21 22 21 18 19 100 97,8 education 28 20 19 18 15 100 75,1 housing allowances 70 23 5 1 1 100 10,2

Adjusted disposable income = (2)+(3) 11 15 17 21 36 100 1 222,9


3626

3934

3931

11

12

11

16

12

18 8

4

131 5

202

5 11

916

0

10

20

30

40

50

60

70

80

90

100

CE AC CE AC CE AC

Others goods &services

Education

Health

Food

Housing, water,electricity, gas,transport

For the poorest, health care and education represent a third of actual consumption


Q1 Q5 All households

Make-up of consumption expenditure (CE) vs actual consumption (AC) in 2003


Social transfers in kind have a key role for the oldest and for large families

›Health care : 43% of transfers in kind..but 78% for the oldest (70 or more)

and 69% for families where the head of the household is between 60 and 69

› Education : 33% of transfers in kind..but 61% for the largest families

52% for families with two children

48% for single parent families


Conclusions

›Micro data bridged with national account data on household income and consumption

›Main conclusions :– Financial income and savings highly concentrated on

the top of the distribution

– Some categories of households with low level of income have, on average, negative savings but they are the main beneficiaries of social transfers in kind

– For the poorest, health care is the second item in actual consumption

›Next steps : patrimony, purchasing power


Thanks for your attention.

Results and publications can be found at :

In french: http://www.insee.fr/fr/themes/comptes-nationaux/souschapitre.asp?id=72

In english: http://www.insee.fr/en/themes/theme.asp?theme=16

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