Median Household Income Overview
The indicator refers to the median income of a household in a country. Median household income divides households into two equal segments, such that the first half earns less than the median income while the second half earns more. The median income is defined in PPP (Purchasing Power Parity, in Current International Dollars) terms so as to avoid exchange rate fluctuations due to inflationary tendencies across countries. The median income level is generally accepted as a better indication of well-being or actual income distribution as it is not skewed by disproportionate data.
According to GlobalData, the top ten countries with the highest median household income in the world are Singapore, Iceland, Norway, Sweden, Ireland, Luxembourg, Belgium, the United States, Cyprus, and Australia. The average median household income (PPP) was $40,094 in 2021.
Chile’s Median Household Income Highlights in 2021
Chile’s median household income (PPP) hit $19,054 in 2021, an increase of 0.8% over the previous year. Between 2010 to 2021, Chile's median household income (PPP) increased by 7.7%.
Successive government efforts have helped to reduce the poverty level in the country. According to GlobalData, nominal GDP per capita (PPP) rose from $6,382.8 in 1991 to $23,399.9 in 2020, accompanied by a reduction in the number of people living on less than $1.9 a day. The poverty headcount ratio fell from 11.7% in 2015 to 10.8% of the population in 2020.
Government social expenditure takes the form of cash benefits, including old age pensions and tax breaks with social purposes. These benefits are generally distributed to low-income households, the disabled, elderly, sick, unemployed, and young people. According to the OECD, Chile’s public social spending as a percentage of GDP in 2019 was recorded at 11.4% and was below the OECD average of 20%. The incumbent government should allocate more resources to increase its social expenditure levels.
Key elements that are influencing the Global Economy
Increased COVID-19 impact:
As a result of Omicron, a new variant of COVID-19, more cases have been reported worldwide, resulting in the disruption of supply chain management. However, the global vaccination drive has reduced the fatality rate from the coronavirus.
Rising Inflation and Interest Rates:
As a result of rising inflation rates in both developing and advanced economies, central banks have been forced to tighten monetary policy and raise interest rates to keep prices from rising. However, a steady increase in interest rates could cause financial distress in some economies.
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