Formats and related files
Staff and teams are writing in their individual capacity and the views in this paper are not necessarily a “Treasury” view. Please read our disclaimer. This work makes use of Stats NZ’s Integrated Data Infrastructure (IDI), please also read the IDI disclaimer.
A technical report containing additional plots and the underlying data is available here: https://treasury-analytics-and-insights.github.io/analytical-note-24-10-income-inequality-trends/analytical-note-24-10-income-inequality-trends.html
Key insights#
This report investigates changes to income inequality in New Zealand over the period from 2007 to 2023. We find that income inequality increased to approximately 2013, and then declined, with lower inequality at the end of the period than at the start.
In this analytical note, we focus on the Theil index and exploit its decomposability to investigate how changes to incomes within and between different household types contributed to changes in overall inequality. We find that:
- Income gaps are narrowing between multi-adult households with and without children.
- Overall inequality decreased largely due to reduced income gaps between household types, and more similar incomes among multi‑adult households, both with and without children.
- The contribution of single households without children to overall inequality is small, despite the higher level of inequality among these households. This is a result of these households being only a small segment of the total population.
We also explore how senior working patterns and living arrangements are changing, and what impact this is having on senior inequality. We find that:
- Seniors are increasingly working past the age of superannuation eligibility and sharing accommodation with adults other than their partners.
- Inequality among households with non-working seniors is decreasing, both for those living alone and with adults other than their partners.
- While overall inequality decreased for senior households, there is increasing inequality between seniors in different household types categorised by working and living arrangements.
By decomposing population level income inequality, we gain insights into why common perceptions about movements in income inequality are sometimes contradictory to the decreases we have observed in income inequality measurements over recent years.