Census and Statistics Department announces results of household income study

Results of the study on the household income distribution in Hong Kong by making use of the population census/by-census data are published in "Thematic Report: Household Income Distribution in Hong Kong" today (June 18).

Speaking at a press briefing today, the Commissioner for Census and Statistics, Mr Fung Hing-wang, said that with the significant changes in the social, demographic and economic structure of Hong Kong in recent years, the study on income distribution had become highly complex and would require careful interpretation.   This is the first time for the Census and Statistics Department to conduct a detailed and comprehensive study on income distribution in Hong Kong, making use of the rich information collected from the population census/by-census.  The redistributive effects of government intervention on income are also covered in the study.

Mr Fung said, "In the process of compiling this thematic report, we have consulted relevant bureaux and departments, and also the academia.  Detailed analysis on the basis of elaborate compilation method is conducted, incorporating suggestions and information provided as appropriate."
The results of the population census/by-census show that employment income constituted the major source of income for people in Hong Kong, with 78.6% of the population with income had employment income in 2006 as compared to 82.1% in 1996.  The median monthly income from main employment of the working population increased by 5.3% from $9,500 in 1996 to $10,000 in 2006.  In real terms, there was an increase in the median income from $9,348 in 1996 to $10,000 in 2006.

The distribution of income from main employment by decile group indicated that there was a fall in the share of income attributed to the lower decile groups, and a rise in the share to the higher decile groups.  The increased dispersion in the distribution of employment income from 1996 to 2006 was associated with the changes in the demographics of the population and the structure of the economy over the period, including the income differentials due to gender, life cycle and education. 

In the thematic report, Gini coefficients are compiled to examine the extent of dispersion in the employment income distribution.  It is noted that the Gini coefficient increased from 0.483 in 1996 to 0.500 in 2006, indicating a widening gap in employment income.  When further analysed by subgroups of the working population, the Gini coefficients for people working in the manufacturing industry, people engaged as clerks and elementary workers and workers with lower education level were smaller than the overall figure.  On the other hand, the Gini coefficients for people working in the finance and service sectors, people engaged as managers and administrators and people of higher education were larger than the overall figure.  As there has been a continuous shift of the workforce to these categories in the past decade, the overall Gini coefficients for the workforce rose.

The trend of household income was different from that of employment income among individuals.  Between 1996 and 2006, the median monthly household income at current prices edged down slightly, from $17,500 to $17,250.  In real terms, the median monthly household income in 1996 and 2006 were broadly stable, at $17,220 and $17,250 respectively.

Households at both ends of the income distribution witnessed an increase in share over the period.  The percentage share of households with monthly household income at current prices below $4,000 increased from 6.7% in 1996 to 9.2% in 2006, while those with monthly household income at $40,000 or above grew from 15.0% to 17.0%.  One of the reasons for the increase in the former was the increasing number of older-person households, and the increase in the latter was mainly associated with the growth of two-earner households and improvement in educational attainment of the population.

Apart from the Gini coefficients, selected measures have been compiled to analyse the extent of household income disparity.  All of these measures, except one, showed that the household income distribution in Hong Kong had become more dispersed during the ten-year period from 1996 to 2006 though to slightly different extents.   

The Gini coefficient, being a statistic relatively simple to interpret among the income disparity measures and commonly used by other economies, is adopted in the thematic report to perform further detailed analysis on income disparity.

The series of Gini coefficients based on original monthly household income for 1996, 2001 and 2006 were 0.518, 0.525 and 0.533 respectively, reflecting increased household income disparity over the period.  After taking into account the effect of taxation, the Gini coefficients based on post-tax monthly household income scaled down to 0.508, 0.515 and 0.521 for 1996, 2001 and 2006 respectively.  Combining the effects of taxation and social benefits, the Gini coefficients based on post-tax post-social transfer monthly household income further scaled down to 0.466, 0.470 and 0.475 for 1996, 2001 and 2006 respectively.  These reflected that income re-distributed through taxation for the provision of social benefits would help reduce income disparity by redistributing income from the upper end to the lower end.

Combining the effects of government intervention and change in household size, the per capita post-tax post-social transfer household income Gini coefficients remained at the same level of 0.427 in 1996 and 2006.

"The comparison of income disparity on an international scale may be subject to considerable limitations owing to differences in data sources, income definitions and compilation methods.  However, such a comparison adds greater perspective in understanding the income distribution in Hong Kong.  Caution must nevertheless be taken when interpreting the results," Mr Fung said.

"Amongst all the selected economies, Hong Kong has a higher Gini coefficient comparable to those of United Kingdom and Canada.  Hong Kong is an open, city economy with a strong agglomeration of service sector activities which are highly developed and well diversified, employing workers with multifarious experience and skills. 

"Given this nature, income disparity in Hong Kong tends to be greater than in those places with a preponderance of manufacturing and agricultural activities.  Moreover, there is a common trend towards greater income disparity in many economies.  Hong Kong is not unique in moving in this direction," he added.

The thematic report also contains an analysis on the "M-shape Society".  The results of the analysis suggest that there appears to be a lack of consistent findings which can be construed as a clear indication of the emergence of the "M-shape Society" phenomenon in Hong Kong.

The report "Thematic Report: Household Income Distribution in Hong Kong" is now available.  Users can download this publication free of charge at the Statistical Bookstore, Hong Kong (http://www.censtatd.gov.hk/products_and_services/products/publications/index.jsp) of the Census and Statistics Department.

Ends/Monday, June 18, 2007