Income inequality in New Zealand, 1935 – 2014

Abstract

Trends in income inequality are increasingly being examined and discussed by economists and policy makers both in New Zealand and globally. In the case of New Zealand, it is known that income inequality indices, such as the Gini index, increased during the late 1980s and early 1990s, with limited change thereafter. But with most data series beginning in the early 1980s, little is known about the levels and changes of such indices over prior decades. Based on previously unexplored data from Statistics New Zealand Official Yearbooks and Inland Revenue, this paper reports estimates for the Gini index of income inequality for New Zealand from the mid-1930s to the present. They are then compared with similar Gini estimates for Australia for 1942-2001 where some remarkable commonalities are found. The paper describes the methodology used to calculate the index and reports Gini indices for incomes for individuals before tax and, where available, after tax, and separately for male and female incomes from 1981.