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Monitoring Trends in Poverty and Income Distribution: Data, Methodology and Measurement

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  • PETER SAUNDERS
  • BRUCE BRADBURY

Abstract

Australian research on poverty and income distribution has been subject to criticism over definitional, data quality and measurement issues that have undermined its validity and impact. In reviewing these issues, this paper addresses some of the problems that have been identified in the literature and illustrates their importance with examples that shed light on the validity of the arguments. It also seeks to establish whether poverty has increased or decreased in the decade to 2002-03 and examines the overlap between hardship or deprivation and income poverty, and reviews some of the emerging evidence on the dynamics of low income. After a detailed review of data problems, the significance of definitional issues is illustrated in relation to the measurement of income inequality and poverty. Attention then focuses on assessing the sensitivity of estimated trends in income poverty to how poverty is defined and measured. Although there is variation across the different measures, the evidence suggests that progress in reducing relative poverty has been slow. Our preferred measure (based on current income) suggests that relative poverty increased slightly over the decade, with most of the increase occurring between 1995-96 and 1999-2000. When poverty is measured in 'absolute' terms using a poverty line that is held constant in real terms, the poverty rate declined overall, but was more or less constant between 1996-97 and 2000-01. Estimates derived from wave III of Household Income and Labour Dynamics in Australia (HILDA) data indicate that those who were income poor in 2002-03 experienced twice as many hardship conditions as those who were not poor, with around one-quarter of the poor having problems paying bills or seeking external financial assistance. HILDA data also indicate that many of those who are in poverty in any single year manage to escape within the next 2 years, although it is too early to know whether they escape permanently, or slip back into poverty or oscillate on its margins. Copyright © 2006 The Economic Society of Australia.

Suggested Citation

  • Peter Saunders & Bruce Bradbury, 2006. "Monitoring Trends in Poverty and Income Distribution: Data, Methodology and Measurement," The Economic Record, The Economic Society of Australia, vol. 82(258), pages 341-364, September.
  • Handle: RePEc:bla:ecorec:v:82:y:2006:i:258:p:341-364
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    Citations

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    Cited by:

    1. Joan R. Rodgers & Peter Siminski & James Bishop, 2009. "Changes in Poverty Rates during the Howard Era," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 42(3), pages 300-320.
    2. Roger Wilkins, 2014. "Evaluating the Evidence on Income Inequality in Australia in the 2000s," The Economic Record, The Economic Society of Australia, vol. 90(288), pages 63-89, March.
    3. Silvia Mendolia & Peter Siminski, 2016. "New Estimates of Intergenerational Mobility in Australia," The Economic Record, The Economic Society of Australia, vol. 92(298), pages 361-373, September.
    4. Francisco Azpitarte, 2014. "Was Pro-Poor Economic Growth in Australia for the Income-Poor? And for the Multidimensionally-Poor?," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 117(3), pages 871-905, July.
    5. Francisco Azpitarte, 2012. "Was Economic Growth in Australia Good for the Income-Poor? and for the Multidimensionally-Poor?," Working Papers 278, ECINEQ, Society for the Study of Economic Inequality.
    6. Rod Hick, 2009. "The SocialWelfare Pensions in Ireland: Pensioner Poverty and Gender," Working Papers 200902, Geary Institute, University College Dublin.
    7. Hielke Buddelmeyer & Sher Verick, 2008. "Understanding the Drivers of Poverty Dynamics in Australian Households," The Economic Record, The Economic Society of Australia, vol. 84(266), pages 310-321, September.
    8. Aaron Nicholas & Ranjan Ray, 2012. "Duration and Persistence in Multidimensional Deprivation: Methodology and Australian Application," The Economic Record, The Economic Society of Australia, vol. 88(280), pages 106-126, March.
    9. Roger Wilkins, 2007. "The Changing Socio-Demographic Composition of Poverty in Australia: 1982 to 2004," Melbourne Institute Working Paper Series wp2007n12, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne.
    10. Robert Tanton & Yogi Vidyattama & Justine McNamara & Quoc Ngu Vu & Ann Harding, 2009. "Old, Single and Poor: Using Microsimulation and Microdata to Analyse Poverty and the Impact of Policy Change among Older Australians," Economic Papers, The Economic Society of Australia, vol. 28(2), pages 102-120, June.
    11. Elliott Fan & Chris Ryan, 2011. "Reconciling income mobility and welfare persistence," CEPR Discussion Papers 651, Centre for Economic Policy Research, Research School of Economics, Australian National University.
    12. Robson, Doug & Rodgers, Joan R, 2008. "Travail to No Avail? Working Poverty in Australia," Economics Working Papers wp08-08, School of Economics, University of Wollongong, NSW, Australia.
    13. Youjin Hahn & Stephen Matteo Miller & Hee-Seung Yang, 2016. "Inequality, Risk-Sharing and the Crisis: A View From Australia," Monash Economics Working Papers 15-16, Monash University, Department of Economics.
    14. Ann Harding & Robert Tanton, 2014. "Policy and people at the small-area level: using micro-simulation to create synthetic spatial data," Chapters,in: Handbook of Research Methods and Applications in Spatially Integrated Social Science, chapter 25, pages 560-586 Edward Elgar Publishing.
    15. Rodgers, J.R., 2007. "Statistically Significant Changes in the Poverty-Rate, 1997-98 to 2002-03," Economics Working Papers wp07-06, School of Economics, University of Wollongong, NSW, Australia.
    16. Arturo Martinez & Francisco Perales, 2017. "The Dynamics of Multidimensional Poverty in Contemporary Australia," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 130(2), pages 479-496, January.

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