4.2 Poverty measures
Figure 9 shows the proportion of individuals in each adult equivalent disposable income band for 2010 and 2060. It indicates that a larger number of individuals will be living in households earning closer to the median adult equivalent income in 2060.
NZS settings enable recipients to access an adult equivalent income of roughly between 60% and 70% of the median disposable income per adult equivalent person (where the individual is the unit of analysis). As the population ages and the composition of the income distribution changes as a result with the elderly more concentrated in lower income deciles, a larger proportion of people in the population will have access to this income level. Compositional changes at the lower end of the income distribution do not significantly change the median disposable income per adult equivalent person for a particular year, but they do affect the number of households at or below 50%, 60% and 70% of the median equivalised disposable income. With current settings, NZS will enable a higher proportion of lower income households to have a standard of living closer to that of the median household across the income distribution. The 80/20 ratio for the income distribution falls from 2.38 in 2010 to 2.32 in 2020 and 2.22 in 2030. Thereafter the decline is much slower, falling from 2.18, 2.15 and 2.13 in 2040, 2050 and 2060 respectively. Furthermore, Figure 10 shows that headcount poverty measures, when using poverty lines of 50% and 60% of the median disposable income per adult equivalent person, are expected to decrease over time, due to the interaction of demographic change, expected rates of labour force participation and current tax and transfer policy settings.
- Figure 9 - Percentage of Individuals by Disposable Income per Adult Equivalent Person
- Figure 10 - Percentage of Individuals in Households below Median Disposable Income per Adult Equivalent
Families with children are expected to constitute a smaller proportion of the population over time. Compared with 2010, they will also be a smaller proportion of the lower end of the income distribution in 2060. Figure 11 indicates that relative child poverty rates are expected to decrease in the long-term. The main reason for this is that mothers are expected to have children at older ages and on average earn higher market incomes. The labour force participation of working-age females is expected to increase and transfers such as Working for Families (WfF) will continue to provide cash assistance. Therefore, the percentage of children living in households with disposable incomes of less than 50%, 60% or 70% of the median is expected to decrease.
- Figure 11 - Percentage of Dependents in Households earning below Median Adult Equivalent Disposable Income
