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Understanding Changes in the Distribution of Household Incomes in New Zealand Between 1983-86 and 1995-98

Author

Listed:
  • Dean Hyslop
  • Dave Maré

    (Dean Hyslop: New Zealand Treasury, PO Box 3724, Wellington, New Zealand
    Dave Maré: Motu Economic and Public Policy Research Trust, Wellington, New Zealand)

Abstract

This paper presents an analysis of changes in the distribution of gross household income and income inequality over the period 1983–1998. The analysis applies a semiparametric approach to study the effects of changes in the distribution of household types, and changes in National Superannuation (old age pension), household socio-demographic attributes and employment outcomes, and in the “economic returns” to such attributes and employment outcomes on the distribution of income, and uses kernel density methods to estimate these effects. This approach provides a visual appreciation of the shape of the income distribution, and is important in understanding how each of these factors affected different parts of the distribution over the period. We also estimate the effects of each of these factors on changes in various summary measures of inequality over the period. The results find that changes in household structure (particularly the declining proportion of two-parent families), attributes, and employment outcomes each contribute to the observed increase in inequality, while the changes in returns are estimated to reduce the level of inequality. Collectively these factors account for about 50 percent of the observed increase, depending on the measure of inequality used. The results confirm other research findings that the changes were concentrated during the late 1980s.

Suggested Citation

  • Dean Hyslop & Dave Maré, 2001. "Understanding Changes in the Distribution of Household Incomes in New Zealand Between 1983-86 and 1995-98," Treasury Working Paper Series 01/21, New Zealand Treasury.
    • Handle: RePEc:nzt:nztwps:01/21
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    File URL: https://treasury.govt.nz/sites/default/files/2018-02/twp01-21.pdf
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    References listed on IDEAS

    as
    1. Des O'Dea, 2000. "The Changes in New Zealand's Income Distribution," Treasury Working Paper Series 00/13, New Zealand Treasury.
    2. Mary C. Daly & Robert G. Valletta, 2000. "Inequality and poverty in the United States: the effects of changing family behavior and rising wage dispersion," Working Paper Series 2000-06, Federal Reserve Bank of San Francisco.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Mary C. Daly & Robert G. Valletta, 2006. "Inequality and Poverty in United States: The Effects of Rising Dispersion of Men's Earnings and Changing Family Behaviour," Economica, London School of Economics and Political Science, vol. 73(289), pages 75-98, February.
    2. A. B. Atkinson & Andrew Leigh, 2005. "The Distribution of Top Incomes in New Zealand," CEPR Discussion Papers 503, Centre for Economic Policy Research, Research School of Economics, Australian National University.
    3. John Creedy & Jamas Enright & Norman Gemmell & Nick McNabb, 2008. "Equity and Efficiency Measures of Tax-Transfer Systems: Some Evidence for New Zealand," Treasury Working Paper Series 08/04, New Zealand Treasury.
    4. Sylvia Dixon & David C. Maré, 2005. "Changes in the Mâori Income Distribution: Evidence from the Population Census," Labor and Demography 0509006, University Library of Munich, Germany.

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    More about this item

    Keywords

    Household income distribution; Inequality; Kernel density estimation;
    All these keywords.

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Semiparametric and Nonparametric Methods: General
    • I30 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General

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