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4.7  Income inequality

Each decile’s share of total market, disposable and final income, in both 1987/88 and 1997/98, is shown in Table 3. This Table also shows the Gini coefficients associated with each measure of income. Previous New Zealand studies have established that household market income, or disposable income, became more unequally distributed over the 1980s and 1990s. Table 3 adds two findings. Firstly, it shows that final income is more equally distributed than disposable income (the Gini for final income was lower than the Gini for disposable income in both 1987/88 and in 1997/98). Secondly, it shows that final household income became more unequally distributed over this period (the Gini for final income was higher in 1997/98 than it was in 1987/88). It is notable, however, that the growth in inequality of final incomes is relatively small—a 0.023 difference in Gini coefficients between 1987/88 and 1997/98—and is considerably less than the growth in inequality of either market incomes or of final incomes.[16]

Table 3 – Share of total income, by income decile, 1987/88 and 1997/98
Decile a Share of total income (%) where income is defined as:
  Market income Disposable income Final income
  1987/88 1997/98 1987/88 1997/98 1987/88 1997/98
One -0.5 0.5 3.1 3.9 4.0 5.0
Two 2.3 1.4 6.5 5.9 7.4 7.2
Three 4.3 3.3 6.6 5.6 7.2 6.7
Four 6.1 4.8 7.0 6.1 7.6 6.8
Five 8.1 6.5 8.1 7.1 8.3 7.5
Six 9.4 8.4 9.4 8.4 9.5 8.5
Seven 12.2 10.9 11.4 10.0 11.2 9.7
Eight 14.4 13.6 12.8 12.0 12.2 11.3
Nine 18.1 17.4 15.2 14.9 14.3 13.7
Ten 25.7 33.1 19.9 26.1 18.3 23.7
Gini coefficient b 0.424 0.485 0.302 0.352 0.272 0.295
difference   0.061   0.050   0.023

a These are deciles of equivalent disposable income, as used in the other tables and figures in this paper.

b In calculating Gini coefficients, individuals have been re-ranked for each different definition of income, that is, they have been ranked by market income for the market income Gini, and so on. They have not been ranked by equivalent disposable income.

Notes

  • [16]Statistics New Zealand (1999) estimates that its Gini coefficient for household equivalent disposable income, calculated using HES data, has a standard error of 0.033. Standard errors have not been calculated in this study but small differences in Gini coefficients should be treated with caution.
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