The gender income gap has always been an important argument coming up often in political debates, policy reports, and everyday news. In the last few years something started to change and important positions have been taken on the subject but, do you think that something is really changing?
In order to study the income gap we have to focus on correctly collecting and interpreting correctly the data we have.
Equivalised income is an indicator of the “real” economic resources available to the members of a household: it can be seen as a realistic measure of what the household can consume given their number, needs ecc. It is considered a more appropriate indicator than household income because it allows to analyze household’s growth with respect to the income and the cost in terms of consumption of each additional member. The needs of a household grow with each additional member, but not proportionally; as a consequence, household income has to be adjusted by household size.
Equivalence scales are used to assign a value to each household type in the population; this value is proportional to the households’ needs. Some of the most common equivalence scales are:
- the OECD equivalence scale, where the balance is the following:
- 1 to the head of the household;
- 0.7 to each additional adult;
- 0.5 to each child.
- the OECD modified equivalence scale, with this balance:
- 1 to the head of the household;
- 0.5 to each additional adult;
- 0.3 to each child.
- the square root scale, which divides the household income by the square root of the household size.
Once we get the equivalised income, we have to focus on a measure of inequality: for example, the GINI index or the income quantile share ratio (IQR). The last one is a measure that consider the income of the richest 20% of the population divided by the income of the poorest 20%, and it gives absolute values that indicate how many time the wealthier citizens income is bigger than the income of the low-paid ones.
The GINI index has passed from 33.8 of 2004 to 34.7 of 2014, confirming the stable increasing also shown in the IQR index. Female have generally higher values of income inequality than males, which are instead closer to the overall average or below it. During the years 2002-2010 the income gap was wider, but in 2012 the trend inverted and nowadays the values are more similar making the gap smaller. From 1960, inequality has been growing with a positive trend, but since 2001, the change rate slowed down, and if it continues like this women will not reach pay equity with men until 2119 [source]
Elaborating the data from the European Union Statistic site, we can compare the Italian situation to the international one. We can see in the graphs, Italy is one of the most unequal country, second only to Spain. Both in the male and female case, it is always above the European average along the 2008-16 period (there are no E.U. data for the previous two years).
Moreover, the graph shows for Italy an approximately increasing and stable trend, unlike all the other countries, except for the years 2007-08 – a crisis period – where the Italian income inequality faced a clear reduction. On the other hand, the 2015-16 years saw a relatively sharp positive variation and an opposing trend with respect to the other European countries (with the exception of France “female” ratio).
In conclusion, we could say that, although the E.U. average decreased, Italy had a quite bad performance in terms of income inequality across the 2007-16 decade, leading to almost a one-unit increase in the income quintile share ratio, that is to say from 5,3 to 6,3 on the vertical axis.
In some periods datas have been influenced by social-demographic events, such as the raise in life expectancy, in fact, by looking at the 2014 Survey of Household Income and Wealth we see that “ The female employment rate increased from around one third to about half of the female population aged 15 to 64” and “ these changes went hand in hand with those in the structure of households”.
This is a clear evidence that something has been changing and data are moving towards a more equal society but there are still substantial obstacles to overcome this huge issue.
Group project, made by Alessandro Moraccini, Giulia Tamagnone, Karyna Trachuk, Valerio Pavan, Vincenzo Rossi.
- EU SILC
- 2014 Survey of Household Income and Wealth