Over the last decade, household income inequality decreased in regions that were very unequal in 2010
Income deprivation has been linked to lower well-being and economic outcomes (OECD, 2018). Moreover, large income inequalities between people and places can reduce social mobility and worsen the geography of discontent (OECD, 2023). Today, household income inequality within OECD regions remains high. In 276 regions in 23 OECD countries, the income of the richest 20% of households was on average 6.7 times that of the poorest 20% in 2022. Differences between the least and most unequal region within countries were lowest in Ireland, Hungary and the Slovak Republic and highest in Colombia (7.4 in Risaralda - 21.5 in Cauca), Chile (6.6 in O’Higgings -13.2 in Santiago Metropolitan) and the United States (4.9 in South Dakota - 11.4 in the District of Columbia).
Amidst slow changes in income inequality between the richest and the poorest households at the national level over the last decade, regions that were very unequal in 2010 saw substantial changes (Figure 4.1). In 2010-2022, the biggest decreases in inequality were seen in regions that were relatively more unequal in 2010, mostly in Latin America (Figure 4.2). All regions in Germany, Hungary and Lithuania saw increases and all regions in Belgium, Ireland and Poland saw decreases.
Relative poverty remains widespread in OECD regions, with women being disproportionately affected. On average, 14% of people in OECD regions live in relative poverty (in households with incomes below 50% of the national median disposable income), with little variation in the last 12 years. Women are more likely to be in relative poverty than men: across OECD regions, 15% of women were at risk of poverty, compared to 13% of men. The higher risk of poverty for women varies considerably within countries, spanned by more than 8 percentage points (p.p.) in 5 OECD countries. In 240 out of 289 OECD regions with available data, the female poverty rate surpassed that of males and, for 22 of those, the gap was larger than 5 p.p. (Figure 4.3). Moreover, in 17 out of 24 OECD countries with available data, women may experience more or less poverty compared to men, depending on the region where they live. Regions in Czechia, Lithuania and Spain have the largest female-to-male relative poverty gaps.
Where do the richest and poorest households concentrate? Data available for 222 functional urban areas (FUAs) indicate that incomes in urban centres are 7.5% lower than in commuting zones, except in most (8 out of 14) capital cities, where income is generally higher in urban centres. In 11 out of 15 countries with available data, commuting zones had higher mean income than urban centres (Figure 4.4). In Belgium, where disparities were highest, mean income in urban centres was 25% lower than in commuting zones.
