while it is ultimately disposable income inequality ideally adjusted for publiclyprovided inkind services that matters labour income inequality is one of its major sources and thus warrants a distinct analysis the focus on labour income implies that important population subgroups such as retirees and income sources such as capital income are ignored in the discussion moreover tax and transfer policies are only briefly touched upon in this paper as a thorough elaboration of their inequality effects can be found in joumard etal the authors would like to thank jprgen elmeskov jeanluc schneider peter hoeller romain duval isabelle joumard mauro pisu and kaja fredriksen for their useful comments and suggestions and susan gascard for excellent editorial support