Income - theme page

Key figures 2007. NOK
Median after-tax income, all households	366 000
Of which:
Couples with young children, 0-5 years	557 000
Single parents with young children, 0-5 years	276 000
Couples without children, older person, eldste person 30-44 år	524 000
Persons living alone 30-44 years	254 000
Persons living alone 67 years and older	171 000
Norwegian families, tax-free cash transfers	36,5 billion
Of which: child allowance and cash for care	16,3 billion
Households with debt three times higher than total household income	13 per cent

Explanation of terms

After-tax income
This term is defined as the sum of all income from employment (wages and income from self-employment), property income (including interest received and returns on securities) and various transfers (e.g. different types of pensions, unemployment benefit, child allowance, cash for care, dwelling support, social assistance etc.) received in the year. Deductions comprise assessed taxes and negative transfers (i.e. job-related pension premiums and paid child maintenance). For the majority of households, this income will correspond to the amount available to spend on consumption and savings.

Income per consumption unit (equivalent income)
In order to be able to compare the incomes of different types of households, the household income is normally adjusted using equivalence scales or consumption weights. In this way, the income is calculated after tax per consumption unit. These consumer weights take into account that large households need higher incomes than small households in order to have an equivalent standard of living, and also that large households will benefit from economies of scale with regard to some goods (e.g. TV, washing machine, newspapers, electricity costs etc.). There are numerous types of equivalence scales but there is no consensus of opinion on which scale is the best.

Median income
This is the income amount that divides a group into two equal halves, after the income has been sorted in ascending order (or descending). Thus, there will be just as many persons with an income above the median income as below.

Low income
The low income limit is often referred to as the "breadline" colloquially. There are a number of methods for calculating low income. A commonly used method is to define all persons that have an after-tax household income per consumption unit that is less than 50 or 60 per cent of the median income for all persons, as belonging to a low income group. The number of persons with a low income will vary according to which equivalence scale is applied to calculate income per consumption unit.

Income or wage?

What do you earn? Is it the wage you see on your pay slip each month or your total income last year? Colloquially, wage and income are often used interchangeably but in statistics they are two completely different terms:

Income is a broader term than salary. In addition to income from employment, property income and transfers such as dwelling support, child allowance, unemployment benefit, social security benefits and supplementary benefit are also included, amongst other things. The income statistics measure annual income.

Wages is the payment received for services rendered, and is normally linked to a defined time unit, such as hourly pay, weekly pay or monthly pay. In order to be able to make comparisons in the wage statistics, figures are normally given as a full month's wage.

Focus on

Income

In an economy where the majority of goods and services can be bought, our level of income has a great bearing on how we live. In order to comment on the economic living conditions of the population, the fact that many persons form part of a household where both incomes and expenses are shared must be taken into consideration. Households in Norway receive cash incomes from a variety of sources: wages, income from self-employment, property income, different types of transfers, such as social security benefits, unemployment benefit, child allowance, cash for care, dwelling support, supplementary benefit etc.

The majority of households have had good income growth in recent years. Measured in terms of fixed prices, the median income increased by 48 per cent from 1990 to 2007.

The most important source of income for households is wages. On average, income from wages accounted for 67 per cent of the total income in 2007.

The distribution of income between different groups in society has become more unequal in recent years. In 1990, the 10 per cent of the population with the highest income had 18.7 per cent of the total income in Norway. In 2007, this share had increased to 21.4 per cent. Among the 10 per cent with the lowest income, the corresponding share fell from 4.4 to 4.0 per cent.

The low income group is strongly overrepresented by recipients of the basic pension, supplementary benefit recipients, immigrants, persons with longstanding illness, the long-term unemployed and young single persons.