Income distibution

12. Sep 2023
Income inequality holds steady

The Gini coefficient and the income quintile ratio (also known as the ‘S80/S20 ratio’) are two of the most common metrics used for describing a nation’s income distribution.
These metrics are based on equivalent income, which is an equivalised household income figure adjusted for different household compositions.

Inequality unchanged

An example of the Gini coefficient: if all residents in a country have the same income, the country’s income Gini coefficient would be 0. If one household earns all of the country’s income, the income Gini coefficient would be 100. In 2021, the Faroese Gini coefficient was 21.0, compared to 21.1 in 2020. 

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The top 20% have an income 2.9 times higher than the bottom 20%

The same pattern appears in the income quintile ratio. The income quintile ratio (80/20) divides the population into five equally large groups (quintiles) and compares the total income of the 20% of the population with the highest income (top quintile) to that of the 20% with the lowest income (bottom quintile). In 2021, the top quintile had an income 2.9 times higher than the bottom quintile. This is the same ratio as in 2020.

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Less inequality than other countries

The Gini coefficient for Danmark and the EU combined was above 30 in 2021. Greenland’s figure was 34, while Norway and Sweden’s figures were 27.9 and 26.8, respectively. The Faroes thus have less income inequality than their neighbouring countries.

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Read more about income distribution here.