Unit 1 Micro: Fall in the Scale of UK Income Inequality

New data from the UK's Office of National Statistics finds that the scale of post tax and benefit income inequality has fallen over the last year to the lowest rate for over 25 years. There was a fall in income inequality between 2011 and 2012. This was driven partly by earnings falling for higher income households and partly by changes in taxes and benefits. These changes include an increase in the income tax personal allowance and changes to National Insurance Contributions and Child Tax Credits.

The richest households in Britain had seen their average disposable incomes fall nearly 6.8 per cent since 2008, while disposable income for the poorest have risen by similar amount of 6.9 per cent.