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

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  • Roger Wilkins

    (Melbourne Institute of Applied Economic and Social Research, The University of Melbourne)

Abstract

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 document these changes, present results of analysis of the SIH unit record data, and present independent evidence on income inequality trends using the HILDA Survey, tax records and National Accounts. 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 uncertain, however, reflecting ambiguity about the nature and extent of changes to the distribution of household market income.

Suggested Citation

  • Roger Wilkins, 2013. "Evaluating the Evidence on Income Inequality in Australia in the 2000s," Melbourne Institute Working Paper Series wp2013n26, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne.
    • Handle: RePEc:iae:iaewps:wp2013n26
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    File URL: http://melbourneinstitute.unimelb.edu.au/downloads/working_paper_series/wp2013n26.pdf
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    References listed on IDEAS

    as
    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.
    3. repec:bla:ecorec:v:76:y:2000:i:233:p:116-38 is not listed on IDEAS
    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.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. 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.
    2. 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.
    3. 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.
    4. 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.
    5. 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.
    6. 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.
    7. 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.
    8. 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.
    9. 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.
    10. 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.
    11. 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.
    12. 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.
    13. 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.

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    More about this item

    Keywords

    Income inequality; household surveys; decomposition;
    All these keywords.

    JEL classification:

    • D3 - Microeconomics - - Distribution

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