The trend of welfare disparity among subgroups of population in Australia 1983-1984 - 1993-1994

Abstract

The aim of this paper is to estimate the trend of social welfare for Australia using 1983–1984, 1988–1989 and 1993–1994 Household Expenditure Survey data. The functional form of the Social Welfare Function (SWF) was derived by Sen, Degum, Yitzhaki and Shesinski (all independently). Since the function contains the Gini coefficient as the inequality parameter, it could not be formally disaggregated by subgroups of population. This paper, using a method of subgroup decomposition of the Gini coefficient developed by Podder, attempts to disaggregate the SWF. With this method it is now possible to identify disadvantaged groups by their relative shares in total welfare. In addition the method is used to determine effect of economic growth on specific subgroups, and in turn, on total social welfare. This study is based on the Australian economy. Distribution of relative shares of total social welfare among various regional groups are identified, groups determined by occupational status and groups determined by country of birth. The effect on society's welfare for a percentage change in income of a group and the trend of relative welfare of a specific group are also computed. This information can be used in a variety of social decision making situations, including cost benefit analysis.