Employment, Labour and Social Affairs Statistics Directorate

New OECD data show that, well into the recovery from the global economic crisis, the distribution of pre-tax and transfer income remains significantly more unequal than it was before. Taxes and social transfers cushioned much of this increase of market income inequality, with relatively small changes in inequality of household disposable income. But, given the weakness of the recovery in most countries, the income of the poorest 10 % of the population has continued to decline or to increase less than that of the richest 10%. Relative income poverty – the share of people with less than half of median income of their country in each year – was broadly unchanged between 2007 and 2011. But “anchored poverty ” – with the value of the threshold fixed in real terms at the 2005 level – increased by 2 percentage points in the OECD area during this period, and by much more in countries most affected by the crisis such as Greece and Spain. A long-term pattern documented in previous OECD reports further intensified during the crisis-years: youth have replaced the elderly as the group experiencing the greater risk of income poverty. The distribution of income from work and capital has become more unequal The distribution of “market income ” (gross earnings and capital income) kept widening even as many countries recovered from the crisis. Measured by the Gini coefficient (which is 0 when everybody has the same income and 1 when one person has all the income), market income inequality rose by 1 percentage point or more in 20 OECD countries between 2007 and 2011/12 (orange bars in Figure 1). The largest increases occurred in those countrie