Society at a Glance 2024: OECD Social Indicators

Household income

Disposable household income provides an indication of the goods and services families can purchase on the market. It is thus an objective indication of material quality of life, and it is used to measure poverty and inequality. Converting national currencies into USD using the purchasing power parity (PPP) allows for a meaningful comparison across countries.

In 2021, median disposable household income in Luxembourg was eight times higher than in Mexico and about two times higher than in Estonia (Figure 4.1). Countries with low levels of median household income include Chile, Costa Rica, Mexico and Türkiye. Luxembourg, Norway and the United States are the top three countries with the highest median disposable household income. Median incomes are generally lower in key partner countries than in OECD countries.

In most OECD countries for which long-term data are available, median income has been growing faster than income at the bottom of the distribution and slower than at the top since the 1990s (Figure 4.2). Income growth has been considerably slower across the distribution after the 2008 global financial crisis than in previous decades, despite the redistributive effect of public cash transfers and personal income taxes during this period. In the mid- and late‑ 2010s, on average, real income increased regularly across the distribution, until 2020 (COVID‑19) where real income of the bottom 10% kept growing as in past years thanks to unprecedented responses put in place by many countries to counter the negative impacts of the pandemic. In the same period, real mean and median income growth slowed, and real top income declined slightly in 2020.

Real household disposable income has been eroded by inflation between 2021‑Q4 and 2022‑Q4. On average across the 22 OECD countries for which data are available, inflation outpaced year-on-year changes in nominal household disposable income per capita by 2 percentage points (Figure 4.3). The gap was particularly high in Chile (with negative nominal household income growth) and the United States. In Austria, Denmark, France, Hungary, the Netherlands, Poland and Portugal, household income growth outpaced inflation.

Definition and measurement

Data on annual median equivalised household disposable income come from the OECD Income Distribution Database. Disposable income is market income (income from work and capital) after accounting for public cash transfers received and direct taxes and social security contributions paid. It excludes in-kind services provided to households by governments and private entities, consumption taxes, and imputed income flows due to home ownership. After subtracting taxes and adding cash transfers, household income provides an indication of the goods and services families can purchase on the market. Household income is adjusted for differences in the needs of households of different sizes with an equivalence scale that divides household income by the square root of household size. The adjusted income is then attributed to every person in the household.

For cross-country comparison, national currency measures of income were converted into US dollars (USD) using purchasing power parity (PPP) for private consumption exchange rates as taken from the Prices and purchasing power parities (PPP) statistics. These PPPs reflect the amount of a national currency required in each country to buy the same basket of goods and services as a dollar does in the United States. Both income and PPP estimates are affected by statistical errors, so differences of 5% or less between countries are not considered significant.

Nominal household income per capita is calculated from real gross disposable household income per capita and consumer prices indices (CPI).

Further reading

OECD Income Distribution database, www.oecd.org/social/income-distribution-database.htm.

Caisl, J., et al. (2023), “The uneven impact of high inflation”, OECD Papers on Well-being and Inequalities, No. 18, OECD Publishing, Paris, https://doi.org/10.1787/59e2b8ae-en.

Figure notes

Figure 4.1: No comparable data for Colombia is available.

Figure 4.2: OECD‑20 refers to 20 OECD countries for which long-term income data are available: Australia, Canada, Czechia, Denmark, Finland, France, Germany, Greece, Hungary, Israel, Italy, Japan, Mexico, the Netherlands, Norway, New Zealand, Sweden, Türkiye, the United Kingdom and the United States; income data have been adjusted in most countries due to a change in the standard methodology of household income since 2012.

Figure 4.1. Median income varies by a factor eight across OECD countries

Annual median equivalised disposable income, in 2021, USD at PPP rates

Source: Calculations based on OECD Income Distribution Database, www.oecd.org/social/income-distribution-database.htm.

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Figure 4.2. Over the past 30 years, incomes of the bottom 10% grew slower than mean, median and top incomes

Real income growth by income position, OECD‑20 average (1995 = 100%)

Source: Calculations based on OECD Income Distribution Database, www.oecd.org/social/income-distribution-database.htm.

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Figure 4.3. Inflation outpaced household income growth in most countries in 2022

Annual growth of prices (inflation) and nominal household income per capita, 2021‑Q4 to 2022‑Q4

Source: OECD (2023), OECD Household Dashboard, https://stats.oecd.org/Index.aspx?DataSetCode=HH_DASH; OECD (2023), OECD Consumer Price Indices (CPIs), https://stats.oecd.org/Index.aspx?DataSetCode=PRICES_CPI.

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