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Evaluating the Evidence on Income Inequality in Australia in the 2000s

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  • Roger Wilkins

Abstract

type="main" xml:id="ecor12090-abs-0001"> Published ABS data from the Survey of Income and Housing (SIH) show a substantial increase in income inequality between 2001 and 2010. However, almost all of the increase occurred over a period when changes in survey methodology and income concept were occurring. I present results of analysis of the SIH unit record data, as well as independent evidence provided by the Household, Income and Labour Dynamics in Australia Survey. On the basis of this analysis, I conclude that the SIH overstates the growth in income inequality, even when the income variable examined is notionally consistently defined across surveys. The extent of overstatement is, however, uncertain. Furthermore, it is likely that the picture provided by the SIH data in 2010 is more accurate than the picture provided by the SIH data in 2001 – that is, the ABS is now better measuring income in its household income surveys. Therefore, measured inequality at the start of the decade was too low, rather than measured inequality at the end of the decade being too high.

Suggested Citation

  • 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.
    • Handle: RePEc:bla:ecorec:v:90:y:2014:i:288:p:63-89
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    File URL: http://hdl.handle.net/10.1111/ecor.2014.90.issue-288
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    References listed on IDEAS

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    1. Mark Wooden & Simon Freidin & Nicole Watson, 2002. "The Household, Income and Labour Dynamics in Australia (HILDA)Survey: Wave 1," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 35(3), pages 339-348, September.
    2. George Athanasopoulos & Farshid Vahid, 2003. "Statistical Inference and Changes in Income Inequality in Australia," The Economic Record, The Economic Society of Australia, vol. 79(247), pages 412-424, December.
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    4. 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.
    5. Ann Harding, 1995. "The Impact of Health, Education and Housing Outlays upon Income Distribution in Australia in the 1990s," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 28(3), pages 71-86, July.
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    Cited by:

    1. 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.
    2. Arpita Chatterjee & Aarti Singh & Tahlee Stone, 2016. "Understanding Wage Inequality in Australia," The Economic Record, The Economic Society of Australia, vol. 92(298), pages 348-360, September.
    3. Arturo Martinez Jr. & Tina Rampino & Mark Western & Wojtek Tomaszewski & Jude David Roque, 2017. "Estimating the Contribution of Circumstances that Reflect Inequality of Opportunities," Economic Papers, The Economic Society of Australia, vol. 36(4), pages 380-400, December.
    4. Amy Beech & Rosetta Dollman & Richard Finlay & Gianni La Cava, 2014. "The Distribution of Household Spending in Australia," RBA Bulletin (Print copy discontinued), Reserve Bank of Australia, pages 13-22, March.
    5. Gunasinghe, Chandika & Selvanathan, E.A. & Naranpanawa, Athula & Forster, John, 2020. "The impact of fiscal shocks on real GDP and income inequality: What do Australian data say?," Journal of Policy Modeling, Elsevier, vol. 42(2), pages 250-270.
    6. Greg Kaplan & Gianni La Cava & Tahlee Stone, 2018. "Household Economic Inequality in Australia," The Economic Record, The Economic Society of Australia, vol. 94(305), pages 117-134, June.
    7. Nicolas Herault & Francisco Azpitarte, 2016. "Understanding Changes in the Distribution and Redistribution of Income: A Unifying Decomposition Framework," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 62(2), pages 266-282, June.
    8. Kennedy, Tom & Smyth, Russell & Valadkhani, Abbas & Chen, George, 2017. "Does income inequality hinder economic growth? New evidence using Australian taxation statistics," Economic Modelling, Elsevier, vol. 65(C), pages 119-128.
    9. Peter Saunders & Yuvisthi Naidoo, 2018. "Mapping the Australian Poverty Profile: A Multidimensional Deprivation Approach," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 51(3), pages 336-350, September.
    10. Jinjing Li & Hai Anh La & Denisa M. Sologon, 2021. "Policy, Demography, and Market Income Volatility: What Shaped Income Distribution and Inequality in Australia Between 2002 and 2016?," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 67(1), pages 196-221, March.
    11. Jeff Borland & Michael Coelli, 2016. "Labour Market Inequality in Australia," The Economic Record, The Economic Society of Australia, vol. 92(299), pages 517-547, December.
    12. David Gunawan & William E. Griffiths & Duangkamon Chotikapanich, 2020. "Posterior Probabilities for Lorenz and Stochastic Dominance of Australian Income Distributions," Papers 2005.04870, arXiv.org, revised Jul 2021.
    13. Nicholas Biddle & Maxine Montaigne, 2017. "Income Inequality in Australia – Decomposing by City and Suburb," Economic Papers, The Economic Society of Australia, vol. 36(4), pages 367-379, December.

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