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

19 Pages Posted: 4 Sep 2006  

Dean Hyslop

Motu Economic and Public Policy Research

Suresh Yahanpath

Government of New Zealand - Treasury

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Abstract

This article analyses changes in the distributions of working-age individuals' earnings and total income in New Zealand over the period 1998-2004. We find that there have been broad gains in income across the distribution, suggesting the spoils of growth have been shared widely. Mean and median earnings increased 15 and 23 per cent respectively, while mean and median income increased 1213 per cent. Inequality, as measured by the Gini coefficient, was more stable: earnings inequality fell 4 per cent, while income inequality was unchanged. The main drivers of the changes were employment and real wage growth. We estimate that roughly one-half of the growth in average incomes was due to employment growth, and one-quarter each to demographic changes and wage growth. The relative employment and wage contributions varied across the income distribution: employment growth dominated gains at the lower end of the distribution, while wage gains dominated changes at the higher end.

Suggested Citation

Hyslop, Dean and Yahanpath, Suresh, Income Growth and Earnings Variations in New Zealand, 1998-2004. Australian Economic Review, Vol. 39, No. 3, pp. 293-311, September 2006. Available at SSRN: https://ssrn.com/abstract=928022 or http://dx.doi.org/10.1111/j.1467-8462.2006.00419.x

Dean R. Hyslop (Contact Author)

Motu Economic and Public Policy Research ( email )

Level 1, 93 Cuba Street
P.O. Box 24390
Wellington, 6142
New Zealand

Suresh Yahanpath

Government of New Zealand - Treasury ( email )

1 The Terrace
P.O. Box 3724
Wellington, 6011
New Zealand
+1 64-4-471-5927 (Phone)
+1 64-4-472-2492 (Fax)

HOME PAGE: http://www.treasury.govt.nz/workingpapers/2005/twp05-11.pdf

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