Total statistics on income distribution: documentation of statistics

Data description (SIMS 3.1)

The statistics have been discontinued. The total statistics on income distribution describe the annual income of register households and their distribution especially from the regional perspective. The statistics depict the amount of income and its formation from different income sources when taking taxation and income transfers into consideration. Because it is a question of total data formed annually from administrative registers covering the whole population, it is also possible to make dynamic income distribution analyses (e.g. permanent low income). Due to absence of interview data, the concepts of the total statistics on income distribution do not meet fully the national and international recommendations for income, for example, for which reason the main function of the total statistics on income distribution is to support the official income distribution statistics in the compilation of income distribution statistics. The advantage of the total statistics on income distribution over the sample-based income distribution statistics is that they can be used for analysing the income and income distribution of smaller population groups as the data cover the whole population.

Concepts and definitions (SIMS 3.4)

Consumption unit

Income and consumption expenditure calculated per consumption unit can be used to compare households of different sizes and structures with each other. There are several different ways of calculating consumption units. From 2002, the income distribution statistics and the Household Budget Survey have used the OECD's adjusted consumption unit scale recommended by Eurostat, the Statistical Office of the European Communities, where - the first adult of the household receives the weight 1 - other over 13-year-olds receive the weight 0.5 - children receive the weight 0.3 (0 to 13-year-olds). The selected consumption unit scale has a significant effect on income levels and on placement of different population groups in the income distribution.

Disposable money income

Households' disposable money income includes monetary income items and benefits in kind connected to employment relationships. Money income does not include imputed income items, of which the main one is imputed rent. The formation of disposable money income can be described as follows: + wages and salaries + entrepreneurial income + property income (without imputed rent) ----------------------------------------------- = factor income + current transfers received (without imputed rent) --------------------------------------------- = gross money income – current transfers paid -------------------------------------------- = disposable money income When current transfers paid are deducted from gross money income, the remaining income is the household's disposable money income. The primary income concept used in the income distribution statistics is household's disposable money income according to international recommendations, in which case sales profits and taxes paid on them do not belong to the scope of the income concept. Following international recommendations, they are treated as a memorandum item outside the income concept. The concept of disposable money income in the total statistics on income distribution differs from disposable money income in the income distribution statistics. As a conceptual difference, the income concept of the total statistics on income distribution includes taxable realised capital gains. For practical reasons, the total statistics on income distribution do not include the majority of interest income and current transfers received and paid between households (e.g. child maintenance support). Real property tax is not deducted in the total statistics on income distribution either.

Gross income

The household's gross income is obtained when current transfers received by the household are added to the household's factor income (wages and salaries, entrepreneurial and property income), but paid current transfers (e.g. taxes and social security contributions) are not deducted.

Low income

Low-income earners (persons at risk of poverty) are considered those whose household's disposable money income per consumption unit (so-called equivalent income) is lower than 60 per cent of the equivalent median money income of all households. The proportion of the population falling below this income limit is called the low income rate (at-risk-of-poverty-rate). The euro-denominated limit for low income varies by year. The definition is based on the recommendations of Eurostat, the Statistical Office of the European Communities. There is no official national definition for low income or poverty line in Finland. From the statistical reference year 2011 onwards, the income distribution statistics started to use the money income concept meeting international recommendations for statistics on low income earning (poverty risk). In reports published before that, a wider income concept was used, that is, households' disposable equivalent income, when income included so-called imputed rent and sales profits.

Mean income

The arithmetic mean income is received when the income of all income recipients is added up and divided by the number of observations. Mean income is more sensitive to extreme observations than median income.

Property income

Property income includes rental, interest and dividend income derived from registers, taxable capital gains and pensions based on private insurance, and other property income derived from taxation data. Dividend income includes both untaxed and taxable dividend income, and interest on co-operative capital. In addition, property income in income distribution statistics includes interest income subject to withholding tax and tax-free interest income from abroad on which data are obtained with an interview, and which do not come under the scope of the definition used in total statistics on income distribution.

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