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Income Growth and Earnings Variations in New Zealand, 1998-2004 - WP 05/11

Publication Details

  • Income Growth and Earnings Variations in New Zealand, 1998-2004
  • Published: Nov 2005
  • Status: Current
  • Authors: Hyslop, Dean; Yahanpath, Suresh
  • JEL Classification: I32
  • Hard copy: Available in HTML and PDF formats only.

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

New Zealand Treasury Working Paper 05/11

Authors: Dean Hyslop and Suresh Yahanpath

Published: November 2005


This work provides an update of changes in the income distribution over the period from 1998-2004, using data from the Household Labour Force Survey's annual Income Supplement (HLFS-IS). We focus on changes in working-age individuals' earnings and total income distribution and, to allow for resource sharing within households, their equivalised household total income distribution over the period. Our analysis shows that there have been broad gains in income across the distribution, suggesting the spoils of growth have been shared widely across the income distribution. Mean and median individual earnings increased 15 percent and 23 percent respectively, while mean and median individual income both increased 12-13 percent and equivalised household income by 11 percent. Inequality, as measured by the Gini coefficient, was more stable: individual earnings inequality fell 4 percent; individual income inequality was unchanged, while equivalised household income inequality increased 2-3 percent. The main contributors to the observed changes appear to be employment and real wage growth. We estimate that roughly one-half of the growth in average individual incomes is due to employment growth, and one-quarter each to demographic changes and wage growth. We also find that the relative employment and wage contributions have varied across the distribution: income gains at the lower end of the income distributions have been largely driven by employment, while changes at the higher end have been driven by wage gains.

Table of Contents

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Table of Contents

List of Tables

List of Figures

1  Introduction

2  Background and Data Description

  • 2.1 Background
  • 2.2 Data Description

3  Recent Trends in Incomes

  • 3.1  Working-age Individuals’ Earnings and Income
  • 3.2  Working-age Individuals’ Equivalised Incomes

4  Changes in the Distributions

5  Decomposition Analyses of Changes

  • 5.1  Changes across the Income Distribution
  • 5.2  Contributions to Changes in Incomes

6  Concluding Discussion


Appendix:  Data Issues

twp05-11.pdf (489 KB) pp. 38

List of Tables

List of Figures


We thank Bob Buckle, Simon Chapple, Sylvia Dixon, Roger Hurnard, Dave Maré, John Scott, Steve Stillman, Peter Wilson and seminar participants at Motu’s Understanding Adjustment and Inequality workshop and at the Treasury for helpful comments and discussions.  Access to the data used in this study was provided by Statistics New Zealand under conditions designed to give effect to the security and confidentiality provisions of the Statistics Act 1975.  Any views expressed are the sole responsibility of the authors and do not purport to represent those of the Treasury or Statistics New Zealand.


The views, opinions, findings, and conclusions or recommendations expressed in this Working Paper are strictly those of the author(s). They do not necessarily reflect the views of the New Zealand Treasury.  The Treasury takes no responsibility for any errors or omissions in, or for the correctness of, the information contained in these working papers. The paper is presented not as policy, but with a view to inform and stimulate wider debate.

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