Paul & all,
The OECD’s tax-benefit models and Taxing Wages publication are benchmarked to a measure of average earnings known as the earnings of the Average Worker (AW)
which was chosen to maximize comparability across countries. This is defined as the mean earnings of full-time employees in particular industries (corresponding to sectors B N of ISIC revision 4). In the case of the UK the AW figure is derived from the ONS
Annual Survey of Hours and Earnings, the same source as the average (median) earnings of just under £26,000 cited by Paul, and is in GB£s not Euros as he suggests.
The differences in methodology explain the difference between the AW value for the UK and his quoted median (across all industries) earnings figure.
In addition, the AW figures are primarily used for calibration in the OECD’s tax-benefit models (www.oecd.org/els/social/workincentives). These models can,
and do, provide results for widely varying income levels and wage rates.
Further details on the AW definition and methodology are available from the OECD’s Taxing Wages website via
http://www.oecd.org/ctp/taxingwages#Methods.
From: Paul Ashton [mailto:[log in to unmask]]
Sent: 07 June, 2012 7:36 PM
To: [log in to unmask]
Cc: LADAIQUE Maxime, ELS/SPD
Subject: Re: New 2001-2010 OECD Tax-Benefit indicators via www.oecd.org/els/social/workincentives // www.oecd.org/els/social/prestationsetsalaires
UK users of the tax benefit model mentioned will be surprised to discover that, according to the OECD, average annual earnings in the UK in 2010 were £34,297. Their mistake is in quoting earnings, housing costs and welfare payments in £'s
(GBP) but actually using the equivalent amounts in Euros. Average (median) earnings in 2010 were in fact just under £26,000.
How does benefit income compare to earned income? |