Sharp rise in inequality
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Income and wealth statistics for households2005



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Sharp rise in inequality

Norwegian households received NOK 142 billion in property income in 2005. This is a substantial rise of about 58 per cent from the previous year. The strong increase in property income along with the inequal distribution of such income is the main explanation for a more inequal income distribution in 2005.

The increase in property income is mainly due to a substantial increase in received dividends. In 2005, households received NOK 99 billion in dividends, compared to NOK 63 billion in the previous year. 2005 was also a profitable year for selling shares. Between 2004 and 2005, realised capital gains from the sale of shares or fixed property almost doubled, and amounted to NOK 25 billion in 2005.

Strong increase in household income

Total household income rose by roughly 11 per cent and amounted to NOK 1 136 billion in 2005. Total household income is the sum of income from employment, net income from self-employment, property income and various transfers such as pensions and social benefits. Income from work rose by 7 per cent in 2005, while taxable transfers (mainly pensions) rose by 5 per cent. Tax-free transfers, on the other hand, fell by roughly 2 per cent between 2004 and 2005. Tax-free transfers that declined included cash for care, dwelling support and child support.

Greater inequality

The extent of inequality in income distribution changed considerably between 2004 and 2005. The richest 10 per cent of the population increased their share of total household equivalent income from 25.2 to 29.5 per cent. The income concentration at the top 10 per cent of the distribution came at the expense of all other households, who experienced a decline in their share of total income.

All deciles experienced a real growth in income from 2004 and 2005 but the top 10 per cent of the population had a much stronger rise in income compared to households at the bottom of the distribution. While the bottom 10 per cent of the population had a modest increase in household income of just 1 per cent, the top 10 per cent had an increase of almost 30 per cent.

Distribution of household equivalent income after taxes,
between persons. (EU-scale). Decile shares and average,
2005-kroner. Per cent
 Decile sharesAverageGrowth in per cent
13.63.391 80092 9001.2
25.75.3 146 100 150 0002.7
36.86.3 172 100 177 3003.0
47.67.1 193 500 199 9003.3
58.47.9 213 100 220 6003.6
69.18.6 232 800 241 4003.7
710.09.4 254 300 264 6004.1
811.010.5 281 000 293 8004.6
912.612.1 321 500 339 3005.6
1025.229.5 643 200 829 70028.7
All 100.0 100.0 254 900 281 00010.3
Number of persons4 549 8024 585 2334 549 8024 585 233 

The amount of property income received by households is strongly influenced by current tax rules. The income year 2005 was the last year shareholders could receive dividend without paying personal income taxes. This is probably the main explanation for the rise in property income in 2005, and for the increase in inequality.

Changes in underlying data

As of the income year 2005, the household income statistics are based totally on register data. Prior to 2005 the underlying data were based on representative sample surveys where household information (household composition) was collected in interviews. In the new register based income statistics, household information is collected from various administrative sources. For further information on methods, see "About the statistics".

There are several advantages of compiling income distribution statistics from registers rather than sample surveys, for instance higher level of accuracy, the possibility for small domain analyses and geographical and longitudinal analyses. The change in underlying data may, however, harm comparability with older surveys, for instance the possibility for comparing trends in income development for particular household types.