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Income Growth and Earnings Variations in New Zealand, 1998—2004

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  • Dean Hyslop
  • Suresh Yahanpath

    ()
    (The Treasury)

Abstract

This work provides an update of changes in the income distribution over the period from 1998-2004, using data from the Household Labour Force Survey's annual Income Supplement (HLFS-IS). We focus on changes in working-age individuals' earnings and total income distribution and, to allow for resource sharing within households, their equivalised household total income distribution over the period. Our analysis shows that there have been broad gains in income to both individuals and households, suggesting the spoils of growth have been shared widely across the income distribution. Mean and median earnings increased 15 percent and 23 percent respectively, while mean and median individual income both increased 12-13 percent and equivalised household income by 11 percent. Inequality, as measured by the Gini coefficient, was more stable: individual earnings inequality fell 4 percent; individual income inequality was unchanged, while equivalised household income inequality increased 2-3 percent. The main contributors to the observed changes appear to be employment and real wage growth. We estimate that roughly one-half of the growth in average individual incomes is due to employment growth, and one-quarter each to demographic changes and wage growth. We also find that the relative employment and wage contributions have varied across the distribution: income gains at the lower end of the income distributions have been largely driven by employment, while changes at the higher end have been driven by wage gains.

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Bibliographic Info

Paper provided by New Zealand Treasury in its series Treasury Working Paper Series with number 05/11.

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Length: 34 pages
Date of creation: Nov 2005
Date of revision:
Handle: RePEc:nzt:nztwps:05/11

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Postal: New Zealand Treasury, PO Box 3724, Wellington, New Zealand
Phone: +64-4-472 2733
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Web page: http://www.treasury.govt.nz
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Keywords: Income; earnings; employment; wages; inequality;

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  1. Jenkins, Stephen P & Cowell, Frank A, 1994. "Parametric Equivalence Scales and Scale Relativities," Economic Journal, Royal Economic Society, Royal Economic Society, vol. 104(425), pages 891-900, July.
  2. Jenkins, Stephen P. & Van Kerm, Philippe, 2004. "Accounting for Income Distribution Trends: A Density Function Decomposition Approach," IZA Discussion Papers 1141, Institute for the Study of Labor (IZA).
  3. Podder, Nripesh & Chatterjee, Srikanta, 2002. "Sharing the national cake in post reform New Zealand: income inequality trends in terms of income sources," Journal of Public Economics, Elsevier, Elsevier, vol. 86(1), pages 1-27, October.
  4. René Böheim & Stephen P. Jenkins, 2000. "Do Current Income and Annual Income Measures Provide Different Pictures of Britain's Income Distribution?," Discussion Papers of DIW Berlin 214, DIW Berlin, German Institute for Economic Research.
  5. Juhn, Chinhui & Murphy, Kevin M & Pierce, Brooks, 1993. "Wage Inequality and the Rise in Returns to Skill," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 101(3), pages 410-42, June.
  6. Lars Osberg, 1998. "Economic Insecurity," Discussion Papers, University of New South Wales, Social Policy Research Centre 0088, University of New South Wales, Social Policy Research Centre.
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  1. NZ inequality statistics: Some of the research
    by Matt Nolan in The Invisible Hand in Economics on 2013-11-25 19:00:32
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Cited by:
  1. repec:ese:iserwp:2009-18 is not listed on IDEAS
  2. Richard Fabling & Arthur Grimes, 2009. "The "suite" smell of success: complementary personnel practices and firm performance," Reserve Bank of New Zealand Discussion Paper Series DP2009/13, Reserve Bank of New Zealand.

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