Understanding after-housing disposable income effects on rising inequality

Abstract

Wealth and income inequalities are rising globally since the 1970s, with detrimental social, economic and environmental effects. The contribution of housing costs to rising inequality is not well understood. In this paper we examine the intersection of tenure, income, generation and geographical factors compounding after-housing income inequality to understand how housing costs impacted on rising economic inequality in Australia since 1993. Analysing data from the Australian Bureau of Statistics’ Household Expenditure Surveys conducted in 1993–4 and 2017–8, the paper shows that rising housing costs disproportionally curtailed real gains from income growth for lower-income households, exacerbating inequality. Between 1993–4 and 2017–8, the incomes of the top 10% of earners rose at a rate twice as high as the bottom 10% of earners in before-housing income, or three times as high after deducting housing costs. The paper examines how this overarching trend was shaped by the intersection of socioeconomic, generational, tenure and geographical factors.