Is the financial market driving income distribution? – An analysis of the linkage between income and wealth in Europe

Globalisation has a major impact on the levels and distribution of wealth. The financial markets are highly integrated, and valuations of financial assets follow international patterns, which has contributed to large increases in financial wealth over the past 25 years. Nonetheless, this has not led to an equally large increase in property income because the rates of return have decreased during the same era. Moreover, changes in functional income distribution (capital/labour shares) have not been fully transmitted to the distribution of primary income between households because other institutional sectors – particularly the government sector – hold considerable amounts of financial assets. At least in the short term, the decrease in rates of return seems to contradict claims that, due to an increase in both financial and inherited wealth, we are entering an era of increasing income inequality. In this article, the link between financial wealth and pre-tax household income distribution is scrutinised for three European countries using a conceptually fully consistent macro framework. First, national balance sheets are combined with the related income flows. After this, income flows that are not property income but are considered part of national income (e.g., wages and salaries) are added, the national income flows are broken down by institutional sector and the household sector income flows separated. Finally, distributional household micro data are used to break down the aggregate household sector income flows by income decile. The article utilises this framework to analyse the evolution of rates of return and capital and labour shares as well as how the property income flows created by financial wealth have affected household primary income distribution.Globalisation has a major impact on the levels and distribution of wealth. The financial markets are highly integrated, and valuations of financial assets follow international patterns, which has contributed to large increases in financial wealth over the past 25 years. Nonetheless, this has not led to an equally large increase in property income because the rates of return have decreased during the same era. Moreover, changes in functional income distribution (capital/labour shares) have not been fully transmitted to the distribution of primary income between households because other institutional sectors – particularly the government sector – hold considerable amounts of financial assets. At least in the short term, the decrease in rates of return seems to contradict claims that, due to an increase in both financial and inherited wealth, we are entering an era of increasing income inequality. In this article, the link between financial wealth and pre-tax household income distribution is scrutinised for three European countries using a conceptually fully consistent macro framework. First, national balance sheets are combined with the related income flows. After this, income flows that are not property income but are considered part of national income (e.g., wages and salaries) are added, the national income flows are broken down by institutional sector and the household sector income flows separated. Finally, distributional household micro data are used to break down the aggregate household sector income flows by income decile. The article utilises this framework to analyse the evolution of rates of return and capital and labour shares as well as how the property income flows created by financial wealth have affected household primary income distribution

Perusturvan riittävyyden arviointiraportti 2015-2019

Vuosien 2015-2019 lakimuutokset ovat elämäntilanteesta riippuen heikentäneet perusturvan tasoa tai pitäneet sen muuttumattomana. Erityisesti työttömän perusturvan taso on heikentynyt indeksileikkausten ja aktiivimallista johtuvien etuuksien alentamisen seurauksena. Eläkeläisten sekä sairaus- ja vanhempainpäivärahan saajien perusturvan tasot sen sijaan ovat pysyneet kutakuinkin ennallaan. Opiskelijoiden toimeentuloturva on muuttunut entistä lainapainotteisemmaksi. Toimeentulotuki paikkaa perusturvan heikentymistä erityisesti työttömillä. Toimeentulotuen rooli työttömän perusturvan paikkaajana on kasvanut huomattavasti vuosina 2015 2019. Kun huomioidaan toimeentulotuki, perusturvan varassa elävien tulotaso ei ole laskenut vaan pysynyt kutakuinkin ennallaan.nonPeerReviewe

Perusturvan riittävyyden arviointiraportti 2015–2019

Kansaneläkeindeksistä annetun lain mukaan perusturvan riittävyys on arvioitava joka hallituskauden päätteeksi.Sosiaali -ja terveysministeriön toimeksiannosta Terveyden ja hyvinvoinnin laitos kutsui koolle huhtikuussa 2018 perusturvan riittävyyden III arviointiryhmän toteuttamaan järjestyksessä kolmannen perusturvan riittävyyden arvioinnin. Arvio on toteutettu perusratkaisuiltaan samalla tavoin kuin edellinen arviointiraportti. Perusturvaetuuksiksi on katsottu tässä vähimmäismääräiset työttömyysetuudet, vanhempainpäivärahat, sairauspäivärahat, eläkkeet, kotihoidon tuki, opintotuki sekä niitä täydentävät asumistuet. Toimeentulotukea ei katsota perusturvaksi. Tällä kertaa kiinnitetään kuitenkin aiempaa enemmän huomiota perusturvan ja toimeentulotuen suhteeseen. Kaikki esimerkkikotitalouksien laskelmat on nyt esitetty sekä toimeentulotuen kanssa että ilman toimeentulotukea. Se, mikä katsotaan riittäväksi perusturvan tasoksi, on lopulta poliittinen päätös. Olemme käyttäneet suuntaa antavana mittatikkuna Kuluttajatutkimuskeskuksen kohtuullisen minimikulutuksen viitebudjetteja. Niiden perusteella työttömän, kotihoidon tuen, vähimmäismääräisen sairaus- tai vanhempainpäivärahan saajan tulotasot eivät riitä kattamaan kohtuullista minimikulutusta. Eläkeläisen perusturva sen sijaan kattaa kohtuullisen minimikulutuksen. Opiskelijan sosiaaliturva kattaa kohtuullisen minimikulutuksen vain opintolainan kanssa. Vuosien 2015–2019 muutokset ovat elämäntilanteesta riippuen heikentäneet perusturvan tasoa tai pitäneet sen muuttumattomana. Erityisesti työttömän perusturvan taso on heikentynyt indeksileikkausten ja aktiivimallista johtuvien etuuksien alentamisen seurauksena. Eläkeläisten sekä sairaus- ja vanhempainpäivärahan saajien perusturvan tasot sen sijaan ovat pysyneet kutakuinkin ennallaan. Opiskelijoiden sosiaaliturva on muuttunut entistä lainapainotteisemmaksi. Toimeentulotuki paikkaa perusturvan heikentymistä erityisesti työttömillä. Toimeentulotuen rooli työttömän perusturvan paikkaajana on kasvanut huomattavasti vuosina 2015–2019. Kun huomioidaan toimeentulotuki, perusturvan varassa elävien tulotaso ei ole laskenut vaan pysynyt kutakuinkin ennallaan. Perusturvan mahdollistama tulotaso on Suomessa länsieurooppalaista kärki- tai keskitasoa riippuen perhemuodosta ja elämäntilanteesta. Perusturvan varassa olevien tulotaso on pienempi kuin väestön arvioima riittävä vähimmäisturvan taso keskimäärin.</p

Integrated Measurement of Household-Level Income, Wealth and Non-Monetary Well-Being in Finland Integrated measurement of household-level income, wealth and non-monetary well-being in Finland 1

This paper describes households&apos; economic well-being in Finland in 2009, using a survey micro data set that collects, combines and constructs household-level information on income, wealth, and living conditions using telephone interviews, registers, and estimation. In addition to national statistics, this integrated data source has been used as the basis for the Finnish contribution to both the EU Statistics on Income and Living Conditions (EU-SILC, Eurostat) and the Household Finance and Consumption Survey (HFCS, European Central Bank). We first discuss the definitions of wealth and the related income flows, taking the cross-national sources as the reference, and relate these to the operational definition and measurement in the Finnish implementation. We then use the data to adjust the current main EU indicator on at risk of poverty and social exclusion (AROPE) with household net worth, and examine the sensitivity to the wealth and income concepts and asset-based poverty thresholds. We conclude by discussing the uncertainty related to the various data sources

Is property driving income distribution? : An analysis of the linkage between income and wealth in Finland, France and Spain

In this article, the link between financial wealth and pre-tax household income distribution is scrutinised for three European countries using a conceptually fully consistent macro framework. First, national balance sheets are combined with the related income flows. After this, income flows that are not property income but that are considered part of national income (e.g., wages and salaries) are added, the national income flows are broken down by institutional sector, and the household sector income flows separated. Finally, distributional household microdata are used to break down the aggregate household sector income flows by income decile. The article utilises this framework to analyse the evolution of rates of return and capital and labour shares, as well as the way in which the property income flows created by financial wealth have affected household primary income distribution.In this article, the link between financial wealth and pre-tax household income distribution is scrutinised for three European countries using a conceptually fully consistent macro framework. First, national balance sheets are combined with the related income flows. After this, income flows that are not property income but that are considered part of national income (e.g., wages and salaries) are added, the national income flows are broken down by institutional sector, and the household sector income flows separated. Finally, distributional household microdata are used to break down the aggregate household sector income flows by income decile. The article utilises this framework to analyse the evolution of rates of return and capital and labour shares, as well as the way in which the property income flows created by financial wealth have affected household primary income distribution.Peer reviewe

Integrated measurement of household-level income, wealth and non-monetary well-being in Finland

Suomen virallinen tilasto (SVT