Income inequality: S80/S20 (i53)

Definition: the inter-quintile ratio of population income is an income inequality indicator. It is the ratio between the total equivalised net disposable income of the 20% of people having the highest income (S80) and the total equivalised net disposable income of the 20% of people having the lowest income (S20). The net equivalent disposable income is used to calculate this indicator. Net disposable income is equal to the sum of gross incomes of all household members minus taxes, social contributions and inter-household transfers (EC, 2016). To obtain the net equivalent disposable income, the net disposable income is divided by an equivalence factor (the so-called modified equivalence scale of the OECD). An adult has a factor of 1, each additional person above 14 years old a factor of 0.5 and each additional person under the age of 14 a factor of 0.3. The net equivalent disposable income allows the standard of living of persons to be compared, taking into account the economies of scale resulting from a joint household and the composition of the family.