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Relative Income Dynamics of Individuals in New Zealand: New Regression Estimates

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dc.contributor.author Creedy, John
dc.contributor.author Gemmell, Norman
dc.contributor.author Laws, Athene
dc.date.accessioned 2018-08-15T03:03:11Z
dc.date.accessioned 2022-07-11T23:01:42Z
dc.date.available 2018-08-15T03:03:11Z
dc.date.available 2022-07-11T23:01:42Z
dc.date.copyright 2018
dc.date.issued 2018
dc.identifier.uri https://ir.wgtn.ac.nz/handle/123456789/20832
dc.description.abstract This paper reports new estimates of simple regression models of income dynamics, using a special New Zealand anonymous dataset compiled from Inland Revenue data. The pattern of relative income changes, despite being subject to considerable complexity, can be described succinctly using a simply autoregressive stochastic process in which Galtonian regression towards the mean is combined with serial correlation in the stochastic term. The parameters of the model have convenient interpretations and can be easily estimated using limited longitudinal data. There is substantial regression towards the mean combined with negative serial correlation: these imply that relatively high income individuals have, on average, lower proportional increases in income from one year to the next compared with those with lower incomes, and those with a large increase in one year are more likely to experience a decrease the following year. Both these effects, though combined with a stochastic component that on its own would tend to increase inequality over time, are sufficient to ensure that inequality falls as the accounting period over which incomes are measured increases, and there is no systematic tendency for annual inequality to rise. en_NZ
dc.format pdf en_NZ
dc.language.iso en_NZ
dc.publisher Te Herenga Waka—Victoria University of Wellington en_NZ
dc.relation.ispartofseries Working Papers in Public Finance ; 06/2018 en_NZ
dc.subject Income en_NZ
dc.subject New Zealand en_NZ
dc.subject Income dynamics en_NZ
dc.subject Income regression en_NZ
dc.title Relative Income Dynamics of Individuals in New Zealand: New Regression Estimates en_NZ
dc.type Text en_NZ
vuwschema.contributor.unit School of Accounting and Commercial Law en_NZ
vuwschema.subject.anzsrcfor 140215 Public Economics - Taxation and Revenue en_NZ
vuwschema.type.vuw Working or Occasional Paper en_NZ
vuwschema.subject.anzsrcforV2 380115 Public economics - taxation and revenue en_NZ
dc.rights.rightsholder www.victoria.ac.nz/sacl/about/cpf en_NZ

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