According to the WU study: The rich earn relatively much more than the average through interest and dividends.
Income inequality in Austria is greater than previously assumed. This is shown by a new study by the Vienna University of Economics and Business and the Vienna Institute for International Economic Studies (wiiw) for 2004 to 2016. The financial crisis of 2008 initially caused the poor-rich gap to close, but since 2012 it has diverged again. Young people under the age of 30 and the poorly qualified suffered significant income losses.
For their study, the researchers have for the first time linked data from surveys and the tax register with data from national accounts. This new statistical method (DINA, Distributional National Accounts) provides more realistic results and also enables data from different countries to be compared.
According to the study, the highest income ten percent of the Austrian population earn more than three times the average and seven times more than the lowest income half of the population. The study also shows that the majority of Austrians benefit from redistribution via the welfare state. “This includes benefits in kind or state services that are generally available to all citizens and increase disposable income,” as WU said on Monday.
In the 12 years examined, real income stagnated for the majority of Austrians, as the economists calculated. However, a closer look at individual population groups revealed major differences. In particular, people with less formal education and young people have lost income – before taxes – but have also benefited significantly from redistribution.
The financial crisis was clearly visible in the income trend. At the very beginning of the global crisis in 2007, income inequality began to decline, before reaching its lowest level in 2012. In relative terms, the rich lost more than the poor during the crisis. However, from 2012 (until 2016) the income gap widened again.
Another finding: capital income, i.e. income from interest and dividends, is very concentrated – more than sometimes thought. With the richest ten percent they make up more than a third, with the richest percent even up to 60 percent. For the bottom 90 percent of Austrians, the share of capital income in the untaxed income is only ten percent. According to the authors of the study, the inequality in financial income in Austria surprisingly reaches US values. They also argue that capital income tax data is inadequate, making it likely that inequality is still underestimated.
