There are a number of different ways in which inequality of household income can be presented and summarised. Perhaps the most widely used measure internationally is the Gini coefficient. Gini coefficients can vary between 0 and 100 and the lower the value, the more equally household income is distributed.
Analysis of Gini coefficients for all households over time (Figure 6) shows that the 1980s were characterised by a large increase in inequality of disposable income, particularly during the second half of that decade. Since then the changes have been smaller in scale. Inequality of disposable income reduced slowly from 1990 until the mid-1990s, but did not fully reverse the rise seen in the previous decade. In the late 1990s, income inequality rose slightly before falling once again in the early 2000s.
There has been a very gradual decline in inequality of disposable income on this measure since 2006/07. The Gini coefficient for disposable income in 2014/15 was 32.6%, effectively unchanged from its 2013/14 value of 32.4%.
There has been some variation over time in the extent to which cash benefits and direct taxes together work to decrease income inequality. This can be seen by comparing the Gini coefficients of original and gross income with the Ginis for disposable income (Figure 6). Cash benefits have the largest impact on reducing income inequality, with direct taxes acting to further reduce it.
Chosen excerpts by Job Market Monitor. Read the whole story at Household disposable income and inequality, financial year ending 2015 – ONS