The distribution of disposable income has remained fairly stable over the past five years, according to the preliminary results of the Survey on Income and Living Conditions conducted by Statistics Iceland (EU-SILC). In 2022, the Gini coefficient, which shows the distribution of disposable income within the national population, stood at 24.2. A Gini coefficient of 0 indicates perfect equality, where everyone has the same income, while a coefficient of 100 expresses perfect inequality where only one person has all the income. Between 2018 and 2022, the Gini coefficient hit its lowest point at 24.2 in 2018 and 2022 and peaked at 24.8 in 2020.

In 2022, the Gini coefficient was 31.1 when social transfers from authorities to households wasn‘t included in the calculation. This suggests that social assistance, such as financial aid from municipalities, child benefits, housing benefits, unemployment benefits, and disability benefits, effectively mitigates inequality. Over the past five years, the Gini coefficient without social transfers reached its lowest point in 2018 at 29.1 and its highest in 2021 at 31.7. This is the first time that Statistics Iceland releases data on the Gini coefficient without social transfers, offering an opportunity to assess the impact of such assistance on overall equality.

In 2022, inequality was relatively low in Iceland in comparison with other European countries. The Gini coefficient in Iceland was the third lowest in Europe, with an index of 24.2, whereas the average Gini coefficient among European Union countries stood at 29.6. Bulgaria had the highest Gini coefficient at 38.4, whereas Slovakia had the lowest at 21.2. Among the Nordic countries, Iceland had the lowest inequality, with Denmark recording a Gini coefficient of 27.7, Sweden 27.6, and Finland 26.6. While data for Norway in 2022 is unavailable, previous years indicated a Gini coefficient ranging from 24.8 to 25.4.

In 2022, the income quintile share ratio, a measure of income disparity between the highest and lowest income quintiles, stood at 3.5. This indicates that the top 20% of households had 3.5 times more equivalised disposable income than the bottom 20% of households. Equivalised disposable income is a measure of household income that takes account of the differences in a household's size and composition. Similar to the Gini coefficient, the quintile share ratio has had minimal fluctuations since 2018, reaching its lowest point of 3.3 in that year and peaking at 3.6 in 2020. These figures indicate limited changes in the income disparity between the highest and lowest income quintiles during this period.

The income disparity between the top and bottom income quintiles widens notably when social transfers are not considered. The quintile share ratio without social transfers was 6.2 in 2022, much higher than when these transfers are factored in. This highlights the substantial impact of assistance from authorities to households in reducing the income gap between individuals in the bottom and top income quintiles.

About the data
Information on the income distribution is derived from the Survey on Income and Living Conditions (EU-SILC). In recent years, Statistics Iceland has made efforts to enhance the processing of EU-SILC data, focusing on improving timeliness and reliability. As a result, the time series has been updated, incorporating refined weights, more precise confidence intervals, and enhanced processing methods. Figures for the years 2019-2022 are preliminary.


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