Inequalities between households in the national accounts breakdown of household accounts
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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

Maryse FESSEAU, Sylvie LE LAIDIER

France – Insee

National Accounts Department


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


Part 1:

Breakdown of householdaccountsusingsurveys : scope, classification and methodology


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


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.


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.


Part 2:

Resultspublished : disposableincome, consumptionexpenditure and savings rate by householdcategories


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.


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€


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


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.


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.


Part 3:

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


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.


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.


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


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.


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)


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…


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.


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.


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


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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