Income inequality and the Gini coefficient

In short: The Gini coefficient measures how unequally income or wealth is distributed within a country. A value of 0 means complete equality, a value of 1 means maximum inequality.

In more detail: The coefficient is calculated from the Lorenz curve, which shows the cumulative share of income held by the population.

In detail

• Lorenz curve: Shows graphically how far the actual distribution deviates from perfect equality.
• International comparisons: Scandinavian countries usually have lower Gini values than many countries in North and South America.
• Market income vs. disposable income: Taxes and transfers often significantly reduce inequality compared to pure market income.
• Wealth inequality: It is usually much higher than income inequality, since wealth can accumulate across generations.
• Limits of the measure: The Gini coefficient says nothing about absolute poverty or prosperity, only relative distribution.
• Causes of inequality: Education, inheritance, labour market structure, and tax policy influence the value.
• Political debate: Redistribution through taxes and social benefits is a central political controversy (steuern-arten-und-prinzipien, bruttoinlandsprodukt-bip).