Income disparities decline

TALLINN - The recent crisis lowered Estonian residents’ standard of living, but also decreased economic inequality, reports Postimees Online, referring to the Statistics Board’s Weblog post.
The head of the Statistics Board’s population and social statistics department Urve Kask noted in the blog entry that although the economic crisis of the late 2000s gave a painful blow to households’ standard of living, it created a more homogenous society in 2010 and caused a decline in the inequality between households.

Kask explained that the standard of living is mostly affected and raised by the homogenous nature of the society that is reflected in a lack of major disparities in persons’ incomes and consumed goods – so that there would not be groups that stand out among others in a major way. The best way to measure this is via income-tenths. Income-tenths are derived from categorizing households by tenths on the basis of their incomes so that ten percent of the lowest-income households form the first tenth, etc.

The ratio between the tenth income tenth and the first income tenth indicates the level of stratification in society.
The beginning of the 1990s brought a new phenomenon in Estonian society – stratification of the population. Groups of extremely successful people emerged, as did those who were socially marginalized. The socially marginalized persons were unable to handle the changes that had occurred in the society. In 1996, the difference between the tenth income-tenth and the first income-tenth was 13 times. With slight fluctuations, such a situation lasted until the year 2000, after which the difference started decreasing slowly, but persistently.

In 2010 this indicator was the lowest – eight times. This was aided by the economic crisis that caused a halt in the increase in wages and in some sectors even a decline in wages.