Agenda item 13 Expert Group on Disparities in National Accounts Meeting of the Advisory Expert Group (AEG) on National Accounts Luxembourg, May 2013 Maryse Fesseau, OECD Peter van de Ven, OECD

Introduction Background Main results Limitations Recommendations Way forward

Background How to arrive at economic growth without people dropping out -> need for information on how income, consumption and wealth are distributed across households Main issues: –Existing distributional information from micro sources: Often focus on one dimension In most cases no consistent time series Not following international standards, especially related to wealth –National accounts data on households hardly provide any distributional information

Background Early 2011: OECD-Eurostat Expert Group (EG) Mandate: study feasibility to arrive at an internationally comparable methodology for generating distributional information consistent with national accounts Members: 25 countries, ECB, Luxembourg Income Studies Organisation of the work: –Phase 1 (2011): comparison between micro and macro data sources on households’ income, consumption and wealth => to better understand similarities and divergences between both data sources –Phase 2 (2012): allocation of national account totals to groups of households using a range of micro sources; derivation of disparity measures on income, consumption and saving, for a given year

Background Organisation of the work (followed): –National estimates following an agreed template and methodology; –Eurostat « a-minima exercise » for EU27. Release of the EG DNA results: –Papers presented at the IARIW and CRIW conferences (August 2012) –Publications at national level - already/about to be released in 12 countries –Publications at international level – 2 Working Papers by end of June: Comparison between micro and macro sources on household income (20 countries), consumption (21 countries) and wealth (7 countries), usually for 2008 or 2009 Experimental results for household adjusted disposable income, actual consumption and saving, fully/partially computed by 16 countries, broken down by income quintile, main source of income and household type

Main results Sharing knowledge across countries and between micro and macro experts Better understanding of NA concepts and compilation procedures, household micro data collection, and differences between both of them Compilation of experimental disparity measures across households groups consistent with NA estimates: –for a range of OECD countries –based on common templates and methodology  Illustrations of results according to income quintiles (note: results still to be checked for some countries)

Main results Relative position of each household group: Adjusted disposable income per consumption units compared to the average, b y income quintile

Main results Relative position of each household group: Actual final consumption per consumption unit compared to the average, by income quintile

Main results Savings* as a percentage of adjusted disposable income, by income quintile Difference between adjusted disposable income and actual final consumption plus the change in net equity of households in pension funds.

Main results Ratio of richest to poorest (Q5/Q1): comparison between the EG results and the OECD micro database (IDD) The legend indicates the extent to which the IDD and the EG results are comparable. A star indicates similar micro sources. A year is indicated in case IDD and EG relate to the same year. Note: micro measures are based on a grouping by individuals, whereas the EG is based on households.

Limitations No detailed recommendations on how to improve current micro and macro compilation processes in order to decrease discrepancies Results on disparity measures are still experimental: –Improvement of data sources needed –Some assumptions to align micro and macro may need further research (STiK at individual level, property income, etc.) –No conclusion on the robustness of the methodology over time –No disparity measures for wealth

Main recommendations Macro –Improve traceability of compilation procedures of national accounts data for households –Compile household accounts at a more detailed level (exclude NPISHs, more detail for some income components) Micro –Improve consistency between micro sources on income and those on consumption and/or wealth –Compile socio-demographic reference series (e.g. number of households) Macro + Micro –Encourage comparison of micro and macro estimates at the national level on a regular basis

Way forward In addition to the necessary refinement of the work done, two options considered : i) compile time series; ii) extend the work to wealth. Survey (16 responses) –First priority in the near future: refinement (12 countries), time series (7), wealth (3) –Answers to proposal for a possible follow-up of the EG: OECD proposal (to be discussed at the June meeting of CSTAT): –Maintain the Electronic Discussion Group to share publications and feedback –In the second half of 2013: Draft Terms of Reference for a new EG (goal and time schedule to be refined on the basis of discussions at CSTAT and further discussions with delegates and experts)

Thank you for your attention