Income Distribution In Australia Research Articles

Identifying changes in the distribution of income from higher‐order moments with an application to Australia

SummaryChanges in the distribution of income over time are identified based on an adjusted two‐sample version of the Neyman smooth test by using subsampling methods to approximate the sampling distribution of the test statistic when samples are not independent of each other. A range of Monte Carlo experiments show that the approach corrects for size distortions arising from dependent samples as well as generating monotonic power functions. Applying the approach to studying the distribution of income in Australia over the business cycle and the Global Financial Crisis, the empirical results highlight the importance of higher‐order moments and demonstrate that business cycles are not all alike as the relative strengths of higher‐order moments vary over phases of the cycle.

Policy, Demography, and Market Income Volatility: What Shaped Income Distribution and Inequality in Australia Between 2002 and 2016?

Isolating the impact of policy, demographic shifts, and market volatility on changes in income inequality is of great interest to policymakers. However, such estimation can be difficult due to the complex interactions and evolutions in the social and economic environment. Through an extended decomposition framework, this paper estimates the effect of four main components (policy, demography, market income and other factors) on the year‐over‐year changes in income inequality in Australia between 2002 and 2016. This was a period marked by substantial policy, population, and economic shifts due to factors such as the mining boom, the global financial crisis and increasing immigration. The framework also incorporates a flexible non‐parametric market income model which captures demand‐side shock better than a standard parametric model. Our results suggest that market income was the primary driver of income inequality for all segments of the income distribution in Australia over the past 15 years. Policy factors, moreover, have had the largest net impact on reducing inequality overall, especially for lower income earners.

Policy, Demography and Market Income Volatility: What Was Shaping Income Distribution in Australia Between 2002 and 2016?

Isolating the impact of policy, demographic shifts and market volatility on changes in income inequality is of great interest to policymakers. However, such estimation can be difficult due to the complex interactions and evolutions in the social and economic environment. Through an extended decomposition framework, this paper estimates the effect of four main components (policy, demography, market income and other factors) on the year-over-year changes in income inequality in Australia between 2002 and 2016. This was a period marked by substantial policy, population and economic shifts due to factors such as the mining boom, the global financial crisis and increasing immigration. The framework also incorporates a flexible non-parametric market income model which captures demand-side shock better than a standard parametric model. Our results suggest that market income was the primary driver of income inequality for all segments of the income distribution in Australia over the past 15 years. Policy factors, on the other hand, have had a moderate impact on reducing inequality overall, but a more critical role for lower income earners.

The scaling of income distribution in Australia: Possible relationships between urban allometry, city size, and economic inequality

Developing a scientific understanding of cities in a fast urbanizing world is essential for planning sustainable urban systems. Recently, it was shown that income and wealth creation follow increasing returns, scaling superlinearly with city size. We study scaling of per capita incomes for separate census defined income categories against population size for the whole of Australia. Across several urban area definitions, we find that lowest incomes grow just linearly or sublinearly (β = 0.94 to 1.00), whereas highest incomes grow superlinearly (β = 1.00 to 1.21), with total income just superlinear (β = 1.03 to 1.05). These findings show that as long as total or aggregate income scaling is considered, the earlier finding is supported: the bigger the city, the richer the city, although the scaling exponents for Australia are lower than those previously reported for other countries. But, we find an emergent scaling behavior with regard to variation in income distribution that sheds light on socio-economic inequality: the larger the population size and densities of a city, while lower incomes grow proportionately or less than proportionately, higher incomes grow more quickly, suggesting a disproportionate agglomeration of incomes in the highest income categories in big cities. Because there are many more people on lower incomes that scale sublinearly as compared to the highest that scale superlinearly, these findings suggest an empirical observation on inequality: the larger the population, the greater the income agglomeration in the highest income categories. The implications of these findings are qualitatively discussed for various income categories, with respect to living costs and access to opportunities and services that big cities provide.

Linking a Microsimulation Model to a Dynamic CGE Model: Climate Change Mitigation Policies and Income Distribution in Australia

This paper extends the 'top-down' framework developed by Robilliard et al. (2001) to link a computable general equilibrium (CGE) model to a microsimulation (MS) model. The proposed approach allows for the linking of an MS model to a dynamic (rather than static) CGE model. The approach relies on altering the sample weights in order to reproduce long-term population projections and changes in employment as estimated by the CGE model. The approach is applied to assess the effects of climate- change mitigation policies in Australia from 2005 to 2030 at five-yearly intervals.

Economic Development and Its Effect on Income Distribution: Evidence from Australia

This study involved investigating the progress of economic development and its effects on income distribution in Australia between 1970 and 2000. Results indicate that Australia exhibited good economic development with increased income inequality. The basis of the estimation of the rate of change and elasticity of income inequality was a new functional form (the double semi-log), using Household Expenditure Survey data. Results illustrate that during high economic growth, income inequality increases. Thus, economic development has a significant positive effect on income distribution even in a developed country such as Australia. This research revisits Kuznets’ hypothesis and shows that the inequality of income can increase at any stage of development, not only in the early stages, which Kuznets originally observed.

The [formula omitted]-generalized distribution: A new descriptive model for the size distribution of incomes

This paper proposes the κ -generalized distribution as a model for describing the distribution and dispersion of income within a population. Formulas for the shape, moments and standard tools for inequality measurement–such as the Lorenz curve and the Gini coefficient–are given. A method for parameter estimation is also discussed. The model is shown to fit extremely well the data on personal income distribution in Australia and in the United States.

A study of the personal income distribution in Australia

We analyze the data on personal income distribution from the Australian Bureau of Statistics. We compare fits of the data to the exponential, log-normal, and gamma distributions. The exponential function gives a good (albeit not perfect) description of 98% of the population in the lower part of the distribution. The log-normal and gamma functions do not improve the fit significantly, despite having more parameters, and mimic the exponential function. We find that the probability density at zero income is not zero, which contradicts the log-normal and gamma distributions, but is consistent with the exponential one. The high-resolution histogram of the probability density shows a very sharp and narrow peak at low incomes, which we interpret as the result of a government policy on income redistribution.

Examining Recent Changes in Income Distribution in Australia

AbstractThis paper analyses recently released ABS data on the distribution of income and examines how inequality has changed since 1994–95 and since the election of the Howard Government in 1995–96. While real disposable incomes increased across the distribution, income inequality has also increased since 1994–95, particularly between 1996–97 and 1999–2000. Over the entire period from 1994–95 to 2000–01, mean income in the top quintile increased by $111 a week, more than eight times the increase of $13 a week in the lowest quintile. Since the Howard government came to office, the estimates indicate that almost half (47.3 per cent) of the total increase in disposable income was received by those in the top quintile — implying that half of the income generated by economic growth has been of no benefit to the bottom four-fifths (in income terms) of the population. Comparison with earlier research also shows that income inequality has, in some respects, increased more rapidly since the mid-1990s than during the 1980s.

Effects of Changes in Family Composition and Employment Patterns on the Distribution of Income in Australia: 1981–1982 to 1997–1998

We examine income distributions over the last two decades, presenting both non‐parametric kernel density estimates and summary measures. Standard errors of summary measures are also reported to facilitate statistical inference. We find a significant increase in private income inequality, but only a modest increase in disposable income inequality, implying an increase in the inequality‐reducing effects of income taxes and transfers. Using a semi‐parametric procedure developed by DiNardo et al. (1996), we then examine the effects of changes in family characteristics on the distribution of private income, finding that half the increase in inequality is explained by changes in the distribution of employment.

The Impact of Health, Education and Housing Outlays upon Income Distribution in Australia in the 1990s

AbstractThe distributional impact of public expenditure on such programs as health, education and housing is frequently ignored in studies of income distribution. This may bias assessment of both the relative living standards of different types of families at any particular point in time and of trends in income inequality over time.This article provides estimates for the 1990s of the combined distributional impact of public outlays on health, education and housing. The analysis indicates that the major beneficiaries of public outlays on these services are families with children and the aged. The pattern of receipt shows a strong life‐cycle effect, with the value of non‐cash benefits peaking in the 30s and 40s and rising again in retirement. Non‐cash benefits are also shown to have an equalising effect upon income distribution.

Longer Run Changes in the Distribution of Income in Australia*

This paper brings new evidence to bear on the question of changes in income distribution amongst individuals in Australia between 1942–43and 1989–90. The changes observed over this period are analyzed in the context of previous studies of the changing distribution of income in Australia over the past 80 years. The main conclusions of the paper are that the distribution of individual income in J 989–90is very similar to that estimated for 1942–43, and there is evidence that income inequality has been increasing during the 1980s

INCOME INEQUALITY IN AUSTRALIA AND NEW ZEALAND: INTERNATIONAL COMPARISONS AND RECENT TRENDS

In this paper we present results on the distribution of income in Australia and New Zealand that can be compared with those for a range of other advanced countries. The framework of analysis, concepts and definitions used have been developed as part of the Luxembourg Income Study (LIS). Using data for the early 1980s, the results indicate that the income distributions in Australia and New Zealand are not, as previous research has suggested, more equal than those in other countries. Neither country has an equivalent net family income inequality ranking in the top half of the eight countries studied. Further analysis indicates increasing inequality in Australia in the first half of the 1980s and, on the basis of some indicators, in New Zealand also. The paper does not investigate the causes of these increases in inequality, although the results indicate that the rise in property income has been a factor behind them.

The Institute's Conference on Poverty, Wealth and Income Distribution in Australia: Introduction

Australian Economic ReviewVolume 21, Issue 3 p. 12-12 The Institute's Conference on Poverty, Wealth and Income Distribution in Australia: Introduction Peter B. Dixon Director, Peter B. Dixon Director Institute of Applied Economic and Social ResearchSearch for more papers by this author Peter B. Dixon Director, Peter B. Dixon Director Institute of Applied Economic and Social ResearchSearch for more papers by this author First published: September 1988 https://doi.org/10.1111/j.1467-8462.1988.tb00549.xAboutPDF ToolsRequest permissionExport citationAdd to favoritesTrack citation ShareShare Give accessShare full text accessShare full-text accessPlease review our Terms and Conditions of Use and check box below to share full-text version of article.I have read and accept the Wiley Online Library Terms and Conditions of UseShareable LinkUse the link below to share a full-text version of this article with your friends and colleagues. Learn more.Copy URL Share a linkShare onFacebookTwitterLinkedInRedditWechat No abstract is available for this article. Volume21, Issue3September 1988Pages 12-12 RelatedInformation

Income Inequality in Australia in an International Comparative Perspective

AbstractEarlier comparative work on income distribution has tended to suggest that Australia is characterised by less income inequality than other industrialised economies. Concerns about the quality of the Australian data used in such comparisons have led to the need for more detailed assessment of the situation. The Luxembourg Income Study has been a focus for this work by bringing together microdata sets for a range of countries and reorganising them to conform to standardised concepts and definitions. This paper builds on earlier work undertaken as part of the Luxembourg Income Study by including Australia in an international comparative analysis of income distribution and redistribution. The Australian data are those from the 1981–82 Income and Housing Survey, with income tax imputed onto the data file. Results are presented for the gross and net income distributions between both families and individuals in seven countries. A common set of equivalence scales is also used to adjust for differing family needs. The results indicate that, using several summary measures of inequality, the distribution of income in Australia is less equal than in four of the other six countries studied. Earlier research which placed Australia high on the international league table of income equality is thus not confirmed by the results.

Analyzing Redistribution Policies: A Study Using Austrialian Data

Preface 1. Introduction Part I. Conceptual Issues in the measurement of Income Distribution: 2. Income-recipient units and their differing needs 3. Income concept in the analysis of income distribution Part II. Measures of Income Inequality, Redistribution, and Equity: 4. On the measurement of income inequality 5. Measures of redistribution and equity Part III. Distribution and Redistribution of Income: 6. Distribution of income in Australia 7. Tax rates and government benefit rates by income ranges 8. Effects of taxes and cash benefits on equity 9. Redistribution of income within and between socioeconomic and demographic groups 10. Progressivity of sales tax on individual expenditure items Part IV. Welfare and Poverty: 11. Distribution of welfare in Australia 12. Optimal negative income taxation, when individuals feel envious 13. The impact of taxes and cash benefits on poverty Appendix Notes References Author index Subject index.

Comment:‘Taxation reform and income Distribution in Australia’

Comment:‘Taxation reform and income Distribution in Australia’

Taxation Reform and Income Distribution in Australia

AbstractThis article contains an analysis of the effects of changes in the existing tax mix on the distribution of income in Australia. Shifts from direct to indirect taxes, similar to ‘Option C’ in the Government's Draft White Paper on tax reform, are considered. The general equilibrium effects of the policy changes are analysed using an extended version of the ORANI model of the Australian economy. The Shorrocks I0 index is then used to identify the sources of inequality in the pre‐ and post‐change distributions. The results are based on data from the ABS Income and Housing Survey for 1981–82.

Inflation and Personal Income Distribution in Australia

Inflation and Personal Income Distribution in Australia