The average monthly income of the population. Classification of population by income

Under the conditions of a market system, incomes for business entities are not guaranteed and are distributed unevenly between different segments of the population. Income inequality is one of the main causes of social instability in society. In order to mitigate inequality and prevent social conflicts, the state pursues a social policy, the most important direction of which is the redistribution of income between individual categories of the population.

We define what income is and what types of income are.

Household income is the sum of cash and material goods received or produced by households over a certain period of time. The level of consumption of the population directly depends on the level of income.

Incomes of the population can be divided into monetary and in-kind. Cash income is income that includes all the income of the family’s budget in the form of remuneration of employees, business income, pensions, scholarships, various benefits, property income (interest on deposits, annuities, dividends on securities, income from real estate), fees, etc.

In-kind income is income that includes products produced by households for their own consumption.

Revenues can also be classified as:

  ¦ total, representing the total amount of cash and in-kind income from all sources of their income;

  ¦ nominal, characterizing the level of cash income regardless of taxation and price changes;

  ¦ disposable, nominal income net of taxes and other obligatory payments, i.e. funds used by the population for consumption and savings;

  ¦ real, characterizing nominal income, taking into account inflationary growth in prices and tariffs;

¦ real disposable cash income, which is determined on the basis of the cash income of the current period minus obligatory payments and taxes adjusted for the consumer price index.

The main income of workers is wages, up to 70% of workers' income. Distinguish between nominal and real wages.

Nominal wages are those funds that the employee receives (or which are accrued to him) in monetary terms for his labor for a certain period of time. The nominal wage is fixed in the labor contract (contract) concluded between the employee and the employer.

Real wages reflect the purchasing power of cash received and represent nominal wages adjusted for the consumer price index. If the rate of increase in nominal wages is lower than the rate of increase in the level of prices for goods and services, then real wages are reduced. Therefore, with an increase in nominal wages, it is necessary to take into account price increases, otherwise an increase in wages will not carry a stimulating function.

The distribution of income occurs between owners of economic factors of production - labor, land, capital, and entrepreneurial abilities. However, if employees are involved in the profits of the enterprise, then they receive a part of factor income.

In addition to wages, cash incomes of the population include business income (profit), property income (interest, dividends, rent), social transfers (pensions, benefits, scholarships) and other income (insurance compensation, winnings, income received in inheritance order, etc.). Under the conditions of a market economy in Russia, in connection with the development of entrepreneurship and various forms of ownership, the structure of monetary incomes of the population has changed significantly compared to the planned economy of the USSR (Table 10.1).

The table above shows that the structure of wage income in Russia has been decreasing since 1995, while social payments (transfers) remain at about the same level, which indicates poor social protection of wage earners and low-income groups. A positive manifestation of a market economy is the growth of property income and business income, although they receive a smaller part of the population. During the planned economy of the USSR, there was a high percentage of income from wages and social payments to the population, which testified to the high social protection of workers, but income from property and entrepreneurial activity was extremely small, since under the current legislation almost all types of such activities were considered illegal.

The correlation in the structure of the population’s cash incomes of the share of wages and social transfers plays an important role in motivating workers. If the structure of cash income is dominated by wages or income from entrepreneurial activity, this indicates an increase in entrepreneurial initiative and economic independence. The trend towards an increase in social transfers in the structure of cash incomes can lead to the psychology of social dependency among some of the working population.

Differences in per capita income are called income differentiation. Income inequality is characteristic of any economic system. However, with the growth of the level of socio-economic development of the country, the indicators of income differentiation are declining. In modern Russia, the differentiation of incomes is significantly higher than in economically advanced countries, and has a tendency to further growth. To a large extent this is due to the fact that many enterprises that were formerly city-forming and often the only sources of income for many citizens turned out to be uncompetitive and closed. At the same time, a social stratum emerged, living and acting according to the laws of the market, “fitting into market relations” and having immeasurably higher incomes. But as more and more broad segments of the population become involved in market relations, as well as the expansion of state support for socially vulnerable layers of the population, the size of inequality should decrease.

The degree of income inequality is reflected in the Lorentz curve (Fig. 10.1). The abscissa axis represents the percentage of households, and the ordinate axis represents the percentage of total income received. The Lorenz curve represents the cumulative distribution of the population and the corresponding income.

Absolutely uniform income distribution (complete equality) is presented in Fig. 10.1 by the OCA line, which indicates that any percentage of households receive an appropriate percentage of income. The area between the absolute equality line and the ODA Lorentz curve reflects the degree of income inequality. The wider this area, the greater the degree of income inequality.

To overcome social inequality in most countries of the world, proportionally-progressive taxation of income is applied. Until 2001, proportionally progressive income tax also operated in Russia. Since 2001, personal income tax (PIT) has been levied at a flat rate of 13%. On the one hand, this, of course, is not bad, since the majority of the country's population is still close to the poverty line, but on the other, the abolition of the proportionally-progressive tax is contrary to the democratic principle, which states: “He who earns more earns more.” Progressive taxes reduce social inequality. This principle of justice, formulated by A. Smith, is clearly demonstrated by the depicted Lorentz curve. Figure 10.1 shows that proportionally progressive taxes make income distribution more even.

In world practice, for the quantitative measurement of the level of income inequality, the following coefficients are used:

  ¦ coefficient of funds - the ratio between the average income of the compared groups or their shares in the total income;

  ¦ decile coefficient - the ratio between the average income of 10% of the poorest and the average income of 10% of the poorest citizens;

  ¦ population income concentration index, or Gini coefficient, varying from 0 to 1; the closer this coefficient is to unity, the greater the inequality in society

Sociologists in terms of income divide the population into different groups. There is a gradation of professional groups by income.

Lower class - it includes two main groups: unskilled and skilled workers. Most unskilled workers live below the poverty line.

The lower middle class - most of its representatives also live below the poverty line (these are library workers, teachers, kindergarten workers).

The middle class already has somewhat large incomes (these are engineering and technical workers, small and medium-sized businesses, university professors, doctors, mid-level managers, and officials).

The upper middle class includes the heads of large firms or corporations, the heads of educational and healthcare institutions, large government officials, senior officers and generals.

The upper class is a small elite group (leaders of the largest corporations of the republic and the state and political elite of the republic). This group, along with a high level of income, influences decision-making in the republic.

As for the middle class (according to official statistics, it is about 27.5% of the republic’s inhabitants), it is rather difficult for small and medium-sized businesses that are part of it and are not connected with large corporations to work and survive.

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Personal income  - a person’s cash income, which consists of wages and other additional funds.

In other words, personal income  - this is all the means that a person receives in cash or by bank transfer as remuneration for labor, dividends, annuities, gifts, etc. and uses at his discretion. It is calculated before tax on personal income, transport and land tax.

Personal income  are an indicator of the true income that an individual can spend on his needs and paying taxes.

We will tell about what personal incomes are, what they are and what functions they perform in our article.

What makes personal income

Personal incomes of the population have several sources of income:

• Earned. This type of income is considered the most common. Personal income is formed due to earned cash. This is a well-known salary that is accrued to employees for work performed or services rendered.
• Unearned.  It is already clear from the very concept that for this type of income generation it is not necessary to adjust efforts, that is, to work. Such incomes represent various social benefits: pension, allowance, scholarship. It can also be interest on deposits, receiving annuities, dividends, etc.

The main functions of personal income

Personal income in the enterprise system has several functions. The main ones are:

• Reproduction. The employer, providing his employees with high wages, gives them the opportunity to devote themselves to their work, to fulfill their tasks, and not be distracted by the search for additional earnings. Thus, professionalism is growing, and vacant places are filling.
• Status.  The employee occupies a position that corresponds to his income.
• Stimulating.  The employer encourages employees to achieve better productivity by increasing wages. As a rule, the size of the remuneration also depends on the result of the work.
• Regulatory.  Demand and supply for labor is regulated precisely by this function.
• Production - business.  Depending on the price of products, wages are also determined. If the company has a sufficient wage fund, then workers can count on a decent wage.

Personal income forms

The population has two forms of personal income:

• Cash form- these are incomes, which include cash receipts in the form of wages, all social payments, as well as interest on deposits, sale of securities, real estate rents, sale of agricultural products, handicrafts, etc.
• In-kind form of income.  Here we consider the receipt by the population of various products that are produced by the household: products from the garden, cattle breeding, poultry farming, products obtained from garden and household plots, harvesting from gifts of nature. All these proceeds are intended for personal consumption, that is, they are not intended to receive cash.

Types of personal income of a citizen, depending on the level of consumer prices

Taking into account the level of consumer prices, the personal income of an average citizen is directly linked. The dynamics of these indicators divides revenues into several types:

• Personal nominal income  - this is the amount of money received by the population in a particular period.
• Personal disposable income. Cash intended for personal use.
• Real income.  Based on available funds, a citizen can afford to purchase services or material values.

Possible sources of replenishment of personal income of a citizen

To replenish his personal income, a citizen can use various sources of profit:

• Conducting his own business, a citizen can receive income from the profits of the enterprise.
• Salary is the most common source of income. It can be obtained from employment or in case of self-employment.
• If there is additional real estate, it can be rented out, for which monthly income is obtained.
• Cash flow from the sale of property: house, apartment, car, etc.
• By providing services, such as medical, you can receive revenues from the state or enterprises.

The difference between personal and national income

National income  can be considered the basis for personal income. This type characterizes the economic stability of the country and shows the total amount of profit from all economic entities. This applies to manufactured products, which are sold in the country itself and abroad.

It is also the provision of various services. Based on this, we can understand that personal income is part of the value of the national productobtained as a result of economic activity of the entire state.

Having these indicators, you can see how rich the state is, or vice versa.

In countries with developed economies and the absence of corruption, citizens are better off and have a personal income that allows them to live at a high level. The population of countries in which national income depends on political and oligarchic actions is largely disadvantaged.

Do social payments relate to the personal income of a citizen

Social payments  represent revenues to citizens from the state or regional authorities. These payments mean: pensions, student scholarships,.

Such transfers of funds are carried out unilaterally, that is, these funds are not taxed and the state does not receive anything from it. This type of income, which looks like a non-market type of service or goods, is transferred to citizens for free. Based on this, we can safely say that these revenues are a source of well-being of the population and therefore they can be called personal income.

How to calculate personal income yourself: formula

In order to calculate personal income, it is necessary to subtract from the national all revenues that do not come at the disposal of households and add those that increase personal income and do not relate to national income.

Formula 1

Personal income \u003d National income - Contributions to social. payments - Corporate income tax - Retained earnings of corporations + Transfers + Interest on government bonds

Formula 2

Personal income \u003d National income - Contributions to social. Insurance - Corporate Profit + Dividends + Transfers + Interest on Government Bonds

The presented formulas for calculating personal income can only be used in economic theory, since often personal income is a certain amount of money before taxes.

What may affect the personal income of a citizen

Personal income of citizens affects many indicators, since it is these incomes that affect the level and prosperity of life. Based on income indicators, one can judge the purchasing power of the population, the level of education, recreation and health.

1. Depending on pay  the economy of the enterprise will depend, and the national economy will already depend on this. For example, workers are always encouraged by better monetary rewards for better performance. Therefore, in order to improve the quality of manufactured products at the enterprise, which can serve to increase the economy of the country, employers are trying to adequately pay for wage workers. Time is not wasted for the recruitment of new personnel and their training, but rather the work goes on continuously.
2. Personal income at all times   influenced the relationship between people.  Since there have always been rich and poor, that is, people with high personal income and insufficient. Based on this, we can say that: "fed up hungry is not a comrade."
3. Depending on the receipt of personal income, citizens form their level and quality of life.  This applies to recreation, the level of medicine and education, the ability to dress and eat, etc.

How to save your income: ways to save

Having received their personal income, citizens spend it for their own purposes - products, services and more. But still there is a desire to save the rest of the money.

How can this be done?

• Set aside 10% from each receipt.
• Make an investment in the bank, and receive interest on the deposit.
• Invest in precious metals.
• Buy real estate that can be rented and receive additional personal income .

So, many people do not even think about their personal income. Where does it come from, how to dispose of it, etc. Also, one should take into account the fact that personal income is not easy money, which citizens dispose of at their discretion. First of all, this is an indicator indicating the level of the economic situation in the country. Because national income directly reflects personal income.

Conclusion

Having received personal income, you can rationally use it for its intended purpose and at the same time save a part of the money in the form of deferred money, deposits in a bank or real estate, which in the end can also bring additional personal income.