Redistribution of income through government transfers

The extent of the redistribution is examined in the following analysis by comparing the change in income distribution and inequality before and after government transfers. The primary income is considered as income before government transfers, the disposable income as income after government redistribution. In addition, the gross income represents an intermediate stage in this redistribution process in which part of the government transfers is already considered with the social benefits. The analyses are based on data from the Household Budget Survey (HBS).

Please consult our publications (see "further information" in the French and German pages) for more detailed analyses.

Income trends

In 2016, the median disposable equivalised income in the total population was CHF 4121 per month, i.e. half of the Swiss resident population have an income above, while the other half have an income below this amount. It has increased by 19% since 2000. After a significant increase from 2008 to 2013, disposable incomes stagnated in 2014 and 2015. The slight upward trend in 2016 will have to be confirmed by the results of subsequent years. The median primary equivalised income has increased by 22% since 2000 and is CHF 4805 in 2016. As the largely parallel course of both curves shows, the redistribution from primary to disposable equivalised income has remained relatively constant.

Quintile share ratio S80/S20

The quintile share ratio S80/S20 compares in a given population the share of the income of the richest 20% with that of the income of the poorest 20%. The further the quotient deviates from 1, the greater the inequality of the spread of income between these population groups.

The quintile share ratio shows a far more equal distribution of income after government transfers (disposable income) compared with the income before government transfers (primary income). This is in line with social security policy which is intended to even out the unequal distribution of income gained on the (labour and capital) markets through taxes and social transfer benefits.

The development of the quintile share ratio since 1998 shows no substantial change globally considered and taking into account the somewhat wide confidence intervals. As regards disposable income, there was a slight downward trend in inequality until 2001 whereas inequality increased in the years 2003 to 2007 and 2009 to 2013. Since 2013, the trend has been a slight decline in inequality, but it is included in the statistical variation range. T,hese trends are far more marked for primary income. Rises in inequality in primary income were balanced by government redistribution and therefore only have a minor impact on disposable income.

Gini coefficient

As the evaluation of the inequality for the quintile share ratio is based on the outer 20% at both ends of the income distribution, it is usually supplemented by further inequality measures which consider the whole distribution. The Gini coefficient is one of these: If one person has the total income in a country, the unequal distribution of income is at a maximum. This country then has a Gini coefficient of 1. If all people living in a country have an equal income, the country will have a Gini coefficient of 0. The lower the value, the more even the distribution.

As for the quintile share ratio, the Gini coefficient also shows a clear reduction in inequality from the mainly market-dependent primary equivalised income to the disposable equivalised income. No major variation in inequality has been observed here during the period under observation. The trends correspond with those of the quintile share ratio: a slight decrease in inequality up to 2001 and then a slight increase from 2003 to 2007 and from 2009 to 2013, with subsequent stabilisation or tendency towards a slight decline in inequality.

Statistical sources and concepts

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CH-2010 Neuch√Ętel
Switzerland

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