Household income inequality has dropped slightly, but is still higher than it was prior to 2000

On the subject of household income distribution, the 2013 census show there is something for both sides of the political divide. The graph below shows the trend in gross household income inequality between 1996 and 2013, as measured by the Gini coefficient, the most well known measurement.


The political right can point to the fact that household incomes are now less unequal than they had been in 2006. The Gini index shows that household income inequality dropped by 2.8 points between 2006 and 2013.1

The left can counter with the observation that income inequality since 2000, whether of individuals or of households, is higher than it had been in the 1990s, 1980s or 1970s.2 The Statistics New Zealand publication “New Zealand Now: Incomes” (1999) states Gini index figures for household market income of 0.469 in 1991 and 0.384 in 1982. (Note ‘market income’ is different from what is declared in the census, as it excludes social welfare benefits).

It has to be pointed out that shifts in income distribution are not simply a matter of whether we have a Labour-led or a National-led government. Influences on household income distribution are a complex brew of demographic change, and change in the factor distribution of income, in the remuneration of different occupations, in the distribution of employment, as well as government policies.

A second point is that the census only provides us with pre-tax income from all sources. This measure of  income misses important tax and benefit influences on household incomes. Only the household economic survey (HES) can tell us about the distribution of disposable income.

Despite the difficulties of interpretation, income and wealth inequalities are certain to be an issue this election year.

More (and better) information on income distribution can be found in Brian Easton’s Users Guide published in the NZ Sociology Journal.3 Also the Ministry of Social Development’s own report on household incomes.4

  1. The trend in the Gini index is corroborated by two other indices, the Theil index and the Mean Logarithmic deviation. Also the Ministry of Social Development’s latest report on household incomes, mentioned in my previous post. 

  2. Inequality among individuals may show different trends from inequality among households; see my posting of January 15 



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