1 Introduction
This study compares household incomes in 1997/98 with household incomes in 1987/88: two years separated by a decade of extensive economic and social changes. What distinguishes it from other New Zealand studies is the estimation of “final incomes”. A household’s final income is its income from wages, salaries and investments, plus the government benefits it receives either in cash or in kind, and minus the income and consumption taxes it pays. The main source of data for the study is Statistics New Zealand’s Household Economic Survey (HES).
Three main results are reported. Principally, the paper reports the amount of final income that different types of households received in 1997/98 compared to the amount these types of households received a decade earlier. In the body of the paper, household incomes are reported by decile of population, that is, for the least well-off 10% of the population (decile 1), the next most well-off 10% (decile 2), and so on up to decile 10. In addition, Appendix 2 reports household incomes in 1987/88 and 1997/98 by categories of households defined by composition and stage of the life-cycle.
Secondly, the paper reports the redistribution of income across different types of households. Redistribution occurs because some types of households pay more tax in a year than they receive in government benefits, while other households receive more in benefits than they pay in tax. Again, this effect is reported by deciles of income in the body of the paper and by household categories in Appendix 2. Finally, the paper looks at how the relative incomes of different deciles have changed between 1987/88 and 1997/98. Other studies have shown that household incomes in New Zealand became more unequally distributed over the 1980s and 1990s. This study considers whether, and to what extent, this has occurred when household income is defined using final income.
The paper is set out as follows. Section 2 contains a discussion of the measure of income used in the study; a summary of the economic, demographic and social policy changes over the 1980s and 1990s; and a discussion of other New Zealand studies of household incomes. The method by which the study was conducted follows in Section 3. The results of the study are presented in Section 4 and there is a discussion in Section 5.
