Differences in income

This morning listening to the news (France Inter) I’m sure I heard them say that the income of the 10% richest is 22 times higher than the income of the 10% poorest in France. This sounds like a lot. This kind of measurement of inequality is a nice way to compare countries, I thought. Everyone is talking about the large difference between rich and poor in France. The Gilets jaunes movement is being explained in economic terms: big inequalities causes a social fracture in the society. So I tried to find relevant statistics, but I got more confused than enlightened:

For Norway I found this graph of income distribution:

Accompanying information claimed that in 1997 the 10% highest income was 2.8 times the 10% lowest income. In 2017 this factor had increased to 3.8!

In France, on the other hand, the organization “L’observatoire des inégalités” has found that in 1970 the ratio of 10% highest income to 10% lowest income (R/P 10% ratio) was 4.6 and it fell to 3.5 in 2005 and has remained there since.

So this means that according to these data Norway used to have small inequalities and France had large inequalities in income, but now we are about the same! This does not agree with my impression that there is much more low income jobs in France than in Norway. Everything that is labour intensive is expensive in Norway compared to France (hotels, restaurants, hairdressers…). Many other things are not more expensive in Norway (groceries are 10-20% more expensive, skiing resorts are much cheaper in Norway,  expenses for activities (sports, music lessons, etc..) are more expensive in France, petrol, cars, clothes, electronics cost more or less the same in both countries). My impression should of course be compared with the OECD comparative price levels where Norway is a factor 1.34 higher than France. This number is much higher than my impression from living in the two countries. Maybe it depends on what I spend my money on?

So I turned to other sources of data. Wikipedia uses UN data for RP 10% ratio in 2011 that has Norway at 6.1 and France at 9.1. Very different numbers indeed! But on the same Wikipedia page, using OECD data for the Gini coefficient, Norway has 0.250 and France 0.293. In the mid 80s they were 0.222 and 0.331. This tells the same story as the R/P 10% ratio I first found: Norway and France are becoming more alike in terms of income inequality. This tells me that it’s not income inequality that makes the big difference between Norway and France.

Maybe the lower 10% income group in France are less happy because the French in average have a lower income than in Norway? A survey shows that the gross per capita and household income is 1.6 times higher in Norway than in France. This means that even after correcting for the price level in Norway the Norwegians have 20% higher purchasing power than the French. Maybe these 20% are what makes life different when you are half way through the month and have no more money in your bank account? I don’t know. However, many countries are much worse off than France in terms of average purchasing power and inequality!! This pushes me to the conclusion that the Gilets jaunes upheaval is more due to the revolutionary history and French culture than due to real economic hardship.