Households Distribution of

Income and Expenditure

Indonesia Case: a study

Puji Agus Kurniawan

National Account Director: Expenditure Side
BPS – Statistics Indonesia
Outline
 Data Source
 Households Distribution on Income
 Households Distribution on Consumption
 Households Distribution on Income Ratio
 Findings

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 Data Source
National Socio-Economic Survey
March, 2020
 Sampel: 320,000 HHs
 Households income and consumption
distribution
grouped by:
• Decile • Source of income
o Wages/Salaries
• Level o Gross Operating Surplus
o National o Property Income
o Urban o Transfer In
o Rural
• Consumption
o Total
o Food
o Nonfood

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HOUSEHOLDS DISTRIBUTION ON INCOME,
NATIONWIDE 2020

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 HH Distribution of Total Income, 2020
Highest and middle decile contribute
15,27
for almost 85% total income.
49,59

35,14

lowest (D1-D4) middle (D5-D8) highest (D9-D10)

The highest decile (D-10) dominate

the total income creation (33,7%).
 16 X bigger than the lowest decile (D-1)

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 Source of Income Contribution to Hh Total • Around 40% income received by households
Income, 2020 is generated from Wages/Salaries.
• Operating Surplus created by unincorporated
45,00
enterprise within Hh contribute to ¼ total
40,8 income.
40,00

35,00 • Another ¼ total income is received from

donation (transfer).
30,00

25,00
24,7 24,4 • Less than 10% total income is provided by
own production to fulfill consumption of the
20,00
same Hh.
15,00

8,8
• Property income is only possessed by certain
Hh having financial and nonproduced assets
10,00

5,00
1,3  lowest penetration to total income.
-
W/S GOS Own Account Property Income Transfer In

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 Source of Income by Decile, 2020
50,00

45,00

40,00

35,00

30,00

25,00

20,00

15,00

10,00

5,00

-
D1 D2 D3 D4 D5 D6 D7 D8 D9 D10

W/S GOS Own Account Prperty Income Transfer In

 The higher decile:

• the higher wages/salaries share as main source of income
• the lower transfer received share to total income
• the lower own production role
 Operating surplus share to total income come at peak for D3 to D6
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HOUSEHOLDS DISTRIBUTION ON INCOME,
URBAN VS RURAL 2020

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Urban vs Rural Contribution to Total Income, 2020

Urban
Total income is mainly
32,57
Rural generated from urban
households (almost 70%) …
67,43

Urban vs Rural by Source of Income, 2020

80,00
70,00

… ultimately from 60,00

Wages/Salaries
50,00
40,00
30,00
20,00
10,00
-
W/S GOS Own Account Property Income Transfer In

Urban Rural 9
 Income Group Urban Rural Indonesia
Lowest (D1-D4) 9.07 28.11 15.27
Middle (D5-D8) 31.71 42.25 35.14
Highest (D9-D10) 59.22 29.65 49.59
Total 100.00 100.00 100.00
Middle + Highest 90.93 71.89 84.73
Middle + Lowest 40.78 70.35 50.41

 Urban area is dominated by highest  By contrast, rural area is dominated by

income group lowest and middle income group
• Highest income generate almost 60% • Lowest income explain almost 30% total
total income income
• Middle + Highest income can explain • Middle + Lowest income can explain
90% total income created in the city 70% total income
• Lowest income only explain less than
10% • Highest income can only contribute less
than 30% total income
 Lead to higher income inequality  Lead to better income inequality, but
with lower standard of living
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HOUSEHOLDS DISTRIBUTION ON CONSUMPTION,
NATIONWIDE 2020

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 Households consumption pattern among decile
similar with income pattern…
Hh Distribution of Consumption, 2020
More than 80% total
16,44
consumption is incurred by
middle and highest decile. 46,79

36,77

lowest (D1-D4) middle (D5-D8) highest (D9-D10)

The highest decile (D-10)

dominate total consumption.
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Share of Food vs Nonfood Consumption, 2020 Food vs Nonfood Share Among Decile, 2020
70
61,0 60,2 60,0 59,3 58,3
60 57,2 55,6
53,1
48,8
50

40 36,0

50,78 49,22 30

20

10

0
D1 D2 D3 D4 D5 D6 D7 D8 D9 D10

Food Nonfood Food Nonfood

Households consumption The higher decile:

on food as many as • the lower food consumption
nonfood. • the higher nonfood consumption
D1: food >> nonfood  food as priority
D10: food << nonfood
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HOUSEHOLDS DISTRIBUTION ON CONSUMPTION,
URBAN VS RURAL 2020

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Urban and Rural Contribution to Total Consumption, 2020

Almost 70% total

33,56
consumption is generated
66,44 from urban, for both food
and nonfood
Urban Rural

Food vs Nonfood Consumption, Urban and Rural 2020

60,00
• Food consumption share: 50,00
urban < rural 40,00

• Nonfood consumption 30,00

share: 20,00

urban > rural 10,00

-
Food Nonfood
Urban Rural 15
 Income Group Urban Rural Indonesia
Lowest (D1-D4) 9.38 30.41 16.44
Middle (D5-D8) 32.88 44.47 36.77
Highest (D9-D10) 57.74 25.11 46.79
Total 100.00 100.00 100.00
Middle + Highest 90.62 69.59 83.56
Middle + Lowest 42.26 74.89 53.21

 Urban consumption is mainly  Unlike urban area with massive

derived by highest income group difference on consumption pattern
for almost 60%. among decile, rural area face lower gap
 Together with middle group, the between groups of income.
highest spend around 90% total
urban consumption.  Almost 75% of rural consumption can be
explained by lowest and middle group.
 Not many contribution from the
lowest group, with share less than  Highest income only contribute to ¼
10%. total consumption.

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HOUSEHOLDS DISTRIBUTION TO INCOME RATIO,
NATIONWIDE 2020

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 70,25% total income is allocated for consumption
Income and Consumption Ratio, by Decile 2020
The highest decile, the lowest
D10 63,70
consumption to income ratio.
D9 71,77
• The highest decile: only allocate
around 60% its income for
D8 73,15

D7 73,61
consumption
D6 73,74
• D2-D9: around 70% total income
D5 73,75
is allocated for consumption
D4 73,81

D3
• The lowest decile: most of total
74,39
income (80%) is attributed for
D2 76,18
consumption
D1 82,00

- 10,00 20,00 30,00 40,00 50,00 60,00 70,00 80,00 90,00

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 but without transfer, consumption to income ratio
is much higher… more than 90%
Consumption to Income Ratio, Transfer Excluded 2020
• Transfer received has big portion on 160,00
income, ultimately for lower decile. 140,00
137,7

• If transfer is excluded from total 120,00 112,0

103,7
income: 100,00
100,5 98,9 97,5 96,9 94,9 91,8
83,2
 D1 to D4 experience deficit: 80,00
consumption > income 60,00

• So, D1 to D4 actually spend all 40,00

income generated mainly from W/S 20,00

and GOS for consumption and it’s -
not enough D1 D2 D3 D4 D5 D6 D7 D8 D9 D10

 transfer help these decile to “survive”

DEFICIT SURPLUS
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HOUSEHOLDS DISTRIBUTION TO INCOME RATIO,
URBAN VS RURAL 2020

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 Consumption to Income Ratio, Urban vs Rural 2020

73,00
72,50
72,00
71,50
Urban households spend
71,00
70,50
their total income on
70,00
69,50
consumption less than rural
69,00
68,50
households.
68,00
67,50
Urban Rural

Consumption to Income Ratio, Urban vs Rural by Decile 2020

D10

In most decile, D9
D8
households in rural area D7

spend their income for D6

D5
Rural

consumption higher
Urban
D4

than urban does.

D3
D2
D1
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- 10,00 20,00 30,00 40,00 50,00 60,00 70,00 80,00 90,00
 Consumption to Income (Transfer Excluded) Ratio,
Urban vs Rural 2020 • If transfer received by
households is excluded from
160,00
total income, then particular
140,00 decile experience deficit:
• Urban: D1 to D3
120,00
• Rural: D1 to D7
100,00
• Most of rural households face
80,00
significant income loss if transfer
60,00 taken away.
40,00 • Surplus decile:
20,00 • Urban: D4 and above
• Rural: started with D8
-
D1 D2 D3 D4 D5 D6 D7 D8 D9 D10

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Findings  Key Findings
o Income and Consumption Ratio
o Households Deficit and Surplus
o Gini Ratio: Income and Expenditure

 The Way Forward

o Pre-pandemic vs during pandemic
income distribution
o More works on Wealth
o Calibration with other data source
o Households sectoral account
benchmarking

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THANK YOU