Introduction

A major determinant of economic wellbeing for most people is the level of income they and other family members in the same household receive. While income is usually received by individuals, it is normally shared between partners in a couple relationship and their dependent children. To a lesser extent, it may be shared with other children, other relatives and possibly other people living in the same household, for example through the provision of accommodation either free or at less than market price. This situation is more likely in the case of non-dependent children and other relatives with low levels of income of their own.

Even when there is no transfer of income between members of a household, nor provision of free or discounted accommodation, household members benefit from the economies of scale that arise from sharing a dwelling. Therefore the household is often used for the analysis of the levels and distribution of income.

For some analysis it is appropriate to use a statistical unit in which it can be assumed that a high degree of sharing of income, and other economic resources, takes place. A unit based on the degree of income sharing between couples and their dependent children may be more useful, in such cases, than one based on the income sharing with other of the household. The income unit serves this purpose.