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New Zealand Now - Incomes (Census 96) (1999) - Reference Reports
What It's About



Introduction
This report traces what has happened to the distribution of New Zealanders' incomes over the period 1982 to 1996; one of the more eventful periods in our economic history.

The analyses focuses on cash income and does not cover the broader range of government activities. It must be recognised that income is not the only measure of economic well-being and it may not even be the most appropriate in all cases (eg does not take into account asset holdings).

The report gives a brief overview of changes in the New Zealand economy (Chapter 1) before discussing trends in income at a personal level (Chapters 2 and 3). Trends in income at a household level are outlined in Chapters 4, 5 6 and 7. It is from these chapters that many of the report's conclusions are drawn.

While the book does not try and explain the causes of changes in New Zealand's income distribution (this would involve quite a different exercise than the one undertaken), it does show how income distribution has changed.

Of particular interest is the make-up of those towards the bottom of the income distribution. We can conclude that Maori, the elderly and children are over-represented in positions of low income relative to other New Zealanders.

Changes in income distribution are a result of many social, demographic and economic factors. Different methods of analysis can give different results, and it is not always possible in studies such as this to say unequivocally whether income inequality has increased or not. What is striking about the results in this report is that the results are unequivocal: income inequality has increased substantially.

Data sources
Most of the information is derived from Statistics New Zealand's Household Economic Survey (HES, formerly known as the HEIS). That information is supplemented by data from the five-yearly Censuses of Population and Dwellings and the Household Labour Force Survey (HLFS).

Data from four years of the HES has been used. These years are the survey years ended March 1982, 1986, 1991 and 1996, and are referred to as the study years. They were chosen because they align (as closely as possible) with the censuses of 1981, 1986, 1991 and 1996. The HES for the year ended March 1982 was chosen because disposable income has not been calculated using the 1981 HES.

Statistical validity
There are a number of technical areas that are the topic of debate in the area of income distribution. It is the view of Statistics New Zealand that while elements of the techniques used in this report reflect the analytical judgement of the authors, the conclusions drawn in this report are robust, given the methodological choices made.

It has been impossible, due to time and resource constraints, to produce tests of statistical significance for all results in this publication. Statements about significance through the text are largely based on the authors' knowledge of sampling errors of the relevant data sources. The central result of this publication, the increase in inequality of equivalent household disposable income as measured by the gini coefficient, has been validated by tests of its statistical significance. These tests show that the increase in income inequality is indeed statistically significant.

Technical notes
This report aims to avoid comment on technical issues such as equivalence scales, or post-stratification of various data sources. It is impossible to avoid such issues totally, however, and some of these issues are discussed, predominantly in the Appendices.

Three income measures that are used regularly in this report: market income, gross (pre-tax) income and disposable (after-tax) income. These are discussed at both a personal and a household income level.

If readers wish to study the numbers underlying the graphs in this report, these can be obtained from Statistics New Zealand's website, http://www.stats.govt.nz.

Unless stated otherwise, all dollar values in this report are adjusted to constant prices (March 1996 dollar terms), to enable comparisons over time to be unaffected by inflation.

There is a great deal of further work that could be done in the area of income distribution. Some potential areas for further work are mentioned in the report; anyone who wishes to comment on these should contact Statistics New Zealand.

The free downloadable report is in Adobe Acrobat reader 4 format

Incomes.pdf2858KB

This spreadsheet below contains all the data behind the figures for the incomes report.

Income.xlsThe downloadable files are in Microsoft Excel 95 (Excel 7) format(s) (274 KB).

Published 12 February 1999



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