Economic Reform & Income Distribution: A Case Study of Hungary and Poland

By Henryk Flakierski | Go to book overview

CHAPTER III
The Distribution of per Capita
Household Income in Hungary

To find a framework to analyze how different variables affect the distribution of per capita household income, 1 the Hungarian Statistical Office has proposed an identity equation which we will use for our analysis of both Hungary and Poland. The formula is:

Y/N = B1 · W|K /B1 · K /N · Y /W'

where

Y =
total income of the household,
N =
number of persons in the household,
B1 =
average earnings of the head of household,
W =
wages and salaries of the household,
K =
number of active earners in the household,
W/K/B1 =
the ratio of average earnings to those of the head of the household,
B1 · W/K/B1 = W/K =
average earnings per earner in the household,
K/N =
the proportion of active earners in the total household, or its rate of activity,
Y/W =
an index showing the proportion of total income exceeding wages and salaries (this reflects social benefits).

-82-

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