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Living Standards & Inequality

Living Standards & Inequality. Alastair Muriel Institute for Fiscal Studies 11 th June 2008. What’s coming up. Living standards Average income growth under Labour Five years of rapid growth Five years of weak growth Comparison with other sources Components of income Inequality

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Living Standards & Inequality

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  1. Living Standards & Inequality Alastair Muriel Institute for Fiscal Studies 11th June 2008

  2. What’s coming up Living standards • Average income growth under Labour • Five years of rapid growth • Five years of weak growth • Comparison with other sources • Components of income Inequality • Distribution of income growth • Summary measures (e.g. Gini)

  3. The UK income distribution in 2006/07 Median, £377 Mean, £463 2.7 million individuals with income above £1000 per week Source: HBAI data

  4. Changes in average real incomes since 1979 (GB) Source: HBAI data

  5. Changes in average real incomes since 1979 (GB) Source: HBAI data

  6. Changes in mean real incomes since 1979 (GB)

  7. Changes in mean real incomes since 1979 (GB) 96/97 to 01/02: Average growth of over 3% per year 01/02 to 06/07: Average growth less than 1% per year

  8. Changes in mean real incomes since 1979 (GB)

  9. Comparison with National Accounts 01/02 to 06/07: Average growth of 2.3% per year Household disposable income per head 96/97 to 01/02: Average growth of over 3% per year GDP per head 96/97 to 01/02: Average growth of 2.7% per year 01/02 to 06/07: Average growth of 1.4% per year Source: HBAI data, National Accounts

  10. Average income growth (GB)

  11. Average income growth (GB)

  12. Average income growth (GB)

  13. Components of Income (GB) Source: HBAI data

  14. Average Annual Growth in Components of Income (GB) Benefits Benefits Source: HBAI data

  15. Income inequality • Popularly defined as ‘the gap between rich and poor’ • No single agreed measure of inequality • Important to look at a range of graphical and summary measures

  16. Income changes by quintile group, 2005/06 – 2006/07 (GB) Source: HBAI data

  17. Income changes by quintile group, 2005/06 – 2006/07 (GB) Source: HBAI data

  18. Income changes by percentile group: 2005/6 – 2006/7 (GB) Source: HBAI data

  19. Income changes by percentile group: 2005/6 – 2006/7 (GB) Source: HBAI data

  20. Income changes by percentile group: 1996/97 – 2006/07 (GB) Source: HBAI data

  21. Income changes by percentile group: 1996/97 – 2006/07 (GB) Source: HBAI data

  22. Income changes by percentile group: 1996/97 – 2006/07 (GB) Source: HBAI data

  23. Income changes by percentile group: 1996/97 – 2006/07 (GB) 1979-1996/7 Source: HBAI data

  24. TheGiniCoefficient:1979–2005/06 (GB) Source: HBAI data

  25. Summary measures of income inequality 1996/97 – 2005/06 (GB) Source: HBAI data

  26. Brown’s redistributive record

  27. Conclusions • Modest growth in average incomes • Fifth successive year of slow growth • Average income growth of 2.1% p.a. under Labour • Income inequality continues to rise • Income inequality edged up between 2004/05 and 2006/07 on many measures • Equals its highest level since our series began (in 1961)

  28. Living Standards & Inequality Alastair Muriel Institute for Fiscal Studies 11th June 2008

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