Sunday, December 13, 2009

Has income inequality grown during the recession?

A great deal is talked about income inequality (and the evils inherent) and there is some MSD research available about it. To satisfy my own curiosity I created the following graphs to flesh out how incomes are distributed in NZ. Using New Zealand Income Survey data I made the first from June 2005 and the second from June 2009. The two sets of data have some differences in terms of the income parameters set and unfortunately the Asian group is missing from 2005. (It largely appears as 'other' but is not distinctly Asian).



The spread of incomes within the ethnicities has stayed relatively stable but I note the number of Maori has increased beyond natural population growth which may indicate that the recession has brought many Maori home.

The most notable aspect of the two graphs is that there is a greater likelihood of a European being in a higher income group and a greater likelihood of a Maori, Pacific or Asian being in a lower income group. That is shown in the inverted shape of the clustered columns.

An effect from WFF is probably showing in the change in the European spread with more people moving into the 4th highest quintile.

The high proportion of low income Asians reflects (I think) the high number of Asian students (the data is for the population 15 years and older) and that families often support their own elderly. In contrast, the high proportion of low income Maori and Pacific reflects reliance on benefits (particularly Maori) and unskilled work.

Accepting for the large low income group, Asians have the least income inequality within the group.

For Maori and Pacific, within their respective groups, the inequality is greatest. That is, the difference between the percentage that are 'poor' compared to the percentage that are 'rich' is greatest.

European 2005 Poor = 16% Rich 22%
European 2009 Poor = 17.5% Rich = 22%
Maori 2005 Poor = 22% Rich = 12.5%
Maori 2009 Poor = 23% Rich = 12%
Pacific 2005 Poor = 25% Rich = 7.5%
Pacific 2009 Poor = 28.5% Rich = 8.5%

And what about between the groups?

In 2005 the average weekly income from all sources was European $637, Maori $471 and Pacific $412

In 2009 the same figures were $728, $548 and $479 . For Asians, $512.

The respective increases for each group were European 14%, Maori 16% and Pacific 16%. So the inequality between the groups is also fairly steady.

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