LAMAS Working Group 24-25 June 2014 Agenda Item 2.3b Final report discussion group on household income Martin.Teichgraber@ec.europa.eu

Context Increasing policy need to get timely data on income and poverty in the EU Timeliness issue with EU-SILC DG EMPL asked Eurostat to look into the possibility to include a household income variable in the EU-LFS

Variable HHINCOME in the EU-LFS Dedicated electronic discussion group Chair: Eurostat Unit F3 (LFS); F4 (SILC) involved too Composition: UK,SI,PT,IT,EL, DE,CH,EE,PL + OECD + Eurostat LFS and SILC teams Time frame: October 2013 – May 2014

Household income: Working phases Evaluation of the "HHINCOME" questions Analysis of the existing questions in EE, DE, CH Development of a model questionnaire Drafting of a proposal for a HHINCOME module Measurement issues Discussion of specific issues (definitions, income bands, household member, registers, etc.)

Household income: framing the question Elements of the model questionnaire (two options) Option 1) - Single question with one variable (asked to 1 household member) + exact amount (income bands as 2nd best solution) Option 2) - Two questions with more variables (asked to 1 household member) + exact amount (income bands as 2nd best solution) Countries not using sub-sampling should try to ask in consecutive interviews always first the initial person

Household income: Option 1 (1/2) Introduction Definition of net household income, including examples of sources States also what should be deducted (taxes, social security contributions) Introduction to question flexible for adaptations by countries

Household income: Option 1 (2/2) Question Asks for the monthly net household income from all sources and from all household members Asks always for the exact amount first and as the second best option for the income bands Alternative: Possible to combine introduction and question in one larger single question

Household income: Option 2 (1/2) Introduction Shorter introduction (definition of net household income, including deduction of tax and social security) Question 1 Asks for all different income sources of the household in the last month (wages, salaries, income self-employment, pension and social benefits, etc.) The list can be adapted by the needs of the countries

Household income: Option 2 (2/2) Question 2 Asks to add up all sources received by all household members minus deduction Asks always for the exact amount first and as the second best option for the income bands Alternative: Possible to combine introduction and question in one larger single question

Household income: Measurement issues (1/3) Definition of net monthly household income The net income (total of all income sources minus taxes and social security contributions) of all members of the private household in the last month Income sources can be wages, salaries, pension benefits, social benefits, etc. Holiday bonus and other bonus should be included in the respective month (no pro rata)

Household income: Measurement issues (2/3) Reference period and definition of the last month The reference period is the last calendar month preceding the month of the reference week (example: reference week falls in the month of June the last month is considered to be May) Results refer to the income from December X -1 to November X The periodicity of the variable HHINCOME will be annual, collection throughout the 52 weeks

Household income: Measurement issues (3/3) Income bands Income bands as auxiliary information to impute the exact amount to get results on distributional income changes National income level vary remarkably, income bands (different bands for each country) as narrow as possible Use of register data (timeliness) Yes, if specific preconditions (coverage, quality and timeliness) are assured

Household income: Pilot testing Laboratory tests / cognitive tests (grants RO, LV) Pilot test of the questionnaire / variables integrated in LFS Discuss with the interviewers on specific aspects Implementation in the LFS without causing contradictions/problems with existing income questions Registers – if data is assuring the preconditions Discussion of the results in LAMAS June 2015

LAMAS is asked to: Comment on the work of the DEG, Approve the final report, Test the model questionnaire on HHINCOME in the LFS, either in the framework of the Eurostat grants 2014 “Quality improvements for the LFS” or without Eurostat co-financing.