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Inequalities between households in the national accounts: Breakdown of household accounts

Inequalities between households in the national accounts: Breakdown of household accounts. Maryse FESSEAU, Sylvie LE LAIDIER France – Insee National Accounts Department. Reconciling macro-economic figures and public’s perception.

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Inequalities between households in the national accounts: Breakdown of household accounts

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  1. Inequalities between households in the national accounts: Breakdown of household accounts Maryse FESSEAU, Sylvie LE LAIDIER France – Insee National Accounts Department

  2. 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

  3. 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

  4. 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 to measure how social transfers in kind reduce inequalities : adjusted disposable income and actual consumption by household categories

  5. Part 1: Breakdown of householdaccountsusingsurveys : scope, classification and methodology

  6. Breakdown of ordinary household accounts for the year 2003 using five surveys (1/3) • The framework of analyses : national accounts, 2003 • A breakdown using five surveys, for ordinary households - mainland • 4 classification variables : standard of living, household composition, employment status or age of the head of the household Source: National accounts 2003 – Base 2000, Insee

  7. Breakdown of ordinary household accounts for the year 2003 using five surveys (2/3) • 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, Taxincome 2003 and calculations by the authors.

  8. Breakdown of ordinary household accounts for the year 2003 using five surveys (3/3) • 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, Employmentsurvey 2003, housing satellite account 2003 and calculations by the authors.

  9. Part 2: Resultspublished : disposableincome, consumptionexpenditure and savings rate by householdcategories

  10. 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 : ordinaryhouseholdsresident in mainland France, excl. Fisim. Source : Insee, national account 2003, SILC2004, TaxIncome 2003, Household Budget 2006, housing and healthsurveys, calculations by the authors.

  11. The 20% richest households receive 40 % of the total amount of disposable income Index 100 for 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. 78.7 B€ 130.3 B€ 159.2 B€ 218.0 B€ 397.3 B€ 993.4 B€

  12. Ratio Q5/Q1 lower on average consumption expenditure than on disposable income Share of each item of expenditure by standard of living quintile in 2003 Scope : ordinaryhouseholdsresident in mainland France, excl. Fisim. Source : Insee, national account 2003, SILC2004, TaxIncome 2003, Household Budget 2006, housing and healthsurveys, calculations by the authors. Q5/Q1 = 3.3

  13. The savings rate increases with income level, negative on average for the poorest Savings, in % of disposable income Average savings rate : 17.3 % Scope : ordinaryhouseholdsresident in mainland France, excl. Fisim. Source : Insee, national account 2003, SILC2004, TaxIncome 2003, Household Budget 2006, housing and healthsurveys, calculations by the authors.

  14. The youngest and single-parent families benefit from private transfers between households Savings rate : Beforeprivatetransfers Afterprivatetransfers Scope : ordinaryhouseholdsresident in mainland France, excl. Fisim. Source : Insee, national account 2003, SILC2004, TaxIncome 2003, Household Budget 2006, housing and healthsurveys, calculations by the authors.

  15. Part 3: A new step to measure how social transfers in kind reduce inequalities : adjusted disposable income and actual consumption by household categories

  16. Definitions: • Social transfers in kind consist of goods and services provided to individual households by government units and NPISHs freely or at prices which are not economically significant; • Added to consumption expenditure , they form actual consumptionof households which represents the whole amount of goods and services consumed by households, whoever is involved in financing it; • The adjusted disposable income is derived from the disposable income by adding the value of social transfers in kind.

  17. Usefulness of actual consumption and adjusted income : • Prevent main accounting aggregates from depending on the institutional arrangements in a country; • Permit comparability, over time and between countries.

  18. Main components of social transfers in kind • Health care reimboursements and education represent the three quarters of transfers in kind; • 9 100€ per household • 5 800€ per consumption unit (CU) Source :national accounts – Base 2000

  19. Social transfers in kind reduce inequalities • From 5.0 to 3.2 regardingadjusteddisposableincome • From 3.3 to 2.2 regardingactual final consumption . Adjusted disposable income and actual consumption 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.

  20. Transfers show a picture of redistribution : the least well-off are the main beneficiaries Transfers in % of primary 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. Balance of transfers in cash = (social benefits and other current transfers) – (current taxes on income and wealth and social contributions)

  21. The health care expenses are the highest part of social transfers in kind but the education expenses are a bit more discriminating: 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. * DI+ education; DI + education + health; DI+education+health+housing allowance…

  22. After transfers in kind, health care is the second item of actual consumption, lightly smaller than housing for the poorest 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.

  23. Social transfers in kind have a key role for the oldest and for large families • Health care : • 78 % for the oldest (70 or more) • 69 % for families where the head of the household is between 60 and 69 • Education: • 61 % for the largest families • 52 % for famillies with two children • 48 % for single parent families 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.

  24. Conclusions • Micro data bridged with national account data on household income and consumption expenditure • 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 step : a measure of the evolution in purchasing power of each of these categories

  25. Thank 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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