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

Author

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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.

Suggested Citation

  • Dean Hyslop & Suresh Yahanpath, 2005. "Income Growth and Earnings Variations in New Zealand, 1998—2004," Treasury Working Paper Series 05/11, New Zealand Treasury.
  • Handle: RePEc:nzt:nztwps:05/11
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    File URL: http://www.treasury.govt.nz/publications/research-policy/wp/2005/05-11/twp05-11.pdf
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    References listed on IDEAS

    as
    1. Lars Osberg, 1998. "Economic Insecurity," Discussion Papers 0088, University of New South Wales, Social Policy Research Centre.
    2. Stephen Jenkins & Philippe Kerm, 2005. "Accounting for income distribution trends: A density function decomposition approach," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, pages 43-61.
    3. Böheim, René & Jenkins, Stephen P., 2000. "Do current income and annual income measures provide different pictures of Britain's income distribution?," ISER Working Paper Series 2000-16, Institute for Social and Economic Research.
    4. 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, vol. 86(1), pages 1-27, October.
    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, vol. 101(3), pages 410-442, June.
    6. Jenkins, Stephen P & Cowell, Frank A, 1994. "Parametric Equivalence Scales and Scale Relativities," Economic Journal, Royal Economic Society, vol. 104(425), pages 891-900, July.
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    Cited by:

    1. 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.
    2. Crawford, Ron, 2009. "Variations in earnings growth: evidence from earnings transitions in the NZ Linked Income Survey," ISER Working Paper Series 2009-18, Institute for Social and Economic Research.

    More about this item

    Keywords

    Income; earnings; employment; wages; inequality;

    JEL classification:

    • I32 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Measurement and Analysis of Poverty

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