1. LAMAS Working Group 24-25 June 2014
Agenda Item 2.3b Final report discussion group on household income

2. Context
Increasing policy need to get timely data on income and poverty in the EU
Timeliness issue with EU-SILC
DG EMPL asked Eurostat to look into the possibility to include a household income variable in the EU-LFS

3. Variable HHINCOME in the EU-LFS
Dedicated electronic discussion group
Chair: Eurostat Unit F3 (LFS); F4 (SILC) involved too
Composition: UK,SI,PT,IT,EL, DE,CH,EE,PL + OECD + Eurostat LFS and SILC teams
Time frame: October 2013 – May 2014

4. Household income: Working phases
Evaluation of the "HHINCOME" questions
Analysis of the existing questions in EE, DE, CH
Development of a model questionnaire
Drafting of a proposal for a HHINCOME module
Measurement issues
Discussion of specific issues (definitions, income bands, household member, registers, etc.)

5. Household income: framing the question
Elements of the model questionnaire (two options)
Option 1) - Single question with one variable (asked to 1 household member) + exact amount (income bands as 2nd best solution)
Option 2) - Two questions with more variables (asked to 1 household member) + exact amount (income bands as 2nd best solution)
Countries not using sub-sampling should try to ask in consecutive interviews always first the initial person

6. Household income: Option 1 (1/2)
Introduction
Definition of net household income, including examples of sources
States also what should be deducted (taxes, social security contributions)
Introduction to question flexible for adaptations by countries

7. Household income: Option 1 (2/2)
Question
Asks for the monthly net household income from all sources and from all household members
Asks always for the exact amount first and as the second best option for the income bands
Alternative: Possible to combine introduction and question in one larger single question

8. Household income: Option 2 (1/2)
Introduction
Shorter introduction (definition of net household income, including deduction of tax and social security)
Question 1
Asks for all different income sources of the household in the last month (wages, salaries, income self-employment, pension and social benefits, etc.)
The list can be adapted by the needs of the countries

9. Household income: Option 2 (2/2)
Question 2
Asks to add up all sources received by all household members minus deduction
Asks always for the exact amount first and as the second best option for the income bands
Alternative: Possible to combine introduction and question in one larger single question

10. Household income: Measurement issues (1/3)
Definition of net monthly household income
The net income (total of all income sources minus taxes and social security contributions) of all members of the private household in the last month
Income sources can be wages, salaries, pension benefits, social benefits, etc.
Holiday bonus and other bonus should be included in the respective month (no pro rata)

11. Household income: Measurement issues (2/3)
Reference period and definition of the last month
The reference period is the last calendar month preceding the month of the reference week (example: reference week falls in the month of June the last month is considered to be May)
Results refer to the income from December X -1 to November X
The periodicity of the variable HHINCOME will be annual, collection throughout the 52 weeks

12. Household income: Measurement issues (3/3)
Income bands
Income bands as auxiliary information to impute the exact amount to get results on distributional income changes
National income level vary remarkably, income bands (different bands for each country) as narrow as possible
Use of register data (timeliness)
Yes, if specific preconditions (coverage, quality and timeliness) are assured

13. Household income: Pilot testing
Laboratory tests / cognitive tests (grants RO, LV)
Pilot test of the questionnaire / variables integrated in LFS
Discuss with the interviewers on specific aspects
Implementation in the LFS without causing contradictions/problems with existing income questions
Registers – if data is assuring the preconditions
Discussion of the results in LAMAS June 2015

14. LAMAS is asked to: Comment on the work of the DEG,
Approve the final report,
Test the model questionnaire on HHINCOME in the LFS, either in the framework of the Eurostat grants 2014 “Quality improvements for the LFS” or without Eurostat co-financing.