Income distibution

12. Jun 2025
Income inequality on the rise in recent years

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 annual income distribution.

These metrics are based on equivalent income, which is an equivalised household income figure adjusted for different household compositions measured over a full year.

Little change in the Gini coefficient

The Gini coefficient is a statistical measure of income or wealth inequality within a population. It ranges from 0 (perfect equality, everyone has the same) to 1 (perfect inequality, one person has everything)

In 2023, the Faroese Gini coefficient was 22.6, compared to 22.2 in 2022. This is the third consecutive year with an increasing Gini coefficient. In the 2020, the figure was 21.4. In the past decade, the figure has mostly ranged between 21 and 23.

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Top 20% earn 3x 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 2023, the top quintile had an income 3.1 times higher than the bottom quintile. This ratio was 3.0 in 2022.

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Less income inequality than elsewhere

Danmark and Sweden have a Gini coefficient of 28, while the EU combined stands at 30. Greenland’s figure is even higher, at 34, while Norway is at 25. The Faroes thus have less income inequality than their neighbouring countries.

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Graphs, etc. regarding income distribution are available here