Wednesday, December 07, 2011

Inequality in New Zealand

It's interesting to see that this report from the OECD on New Zealand's rising inequality has been getting some local media attention -- although it had disappeared off the Stuff website by the end of yesterday. I've recently had conversations with several people -- some foreign, some from here -- in which I've claimed that "in the last thirty years Zealand has gone from being one of the most equal countries in the world to one of the most unequal developed countries".

They've tended to raise their eyebrows dsay that they're not sure that can be right. In fact, New Zealand is now the eight most unequal country out of 22 listed in the OECD report -- 6th out of 20 if you exclude middle-income Mexico and Turkey. But it has seen the most rapid rise in inequality of any OECD country over the past twenty years, with the Gini coefficient going from 27 to 33. Sure, we're not at Latin American levels yet (Mexico is at the relatively equitable end in a continent where the Gini coefficient ranges from the low 40s to around 60) butwe're heading in the right direction.

It should come as no surprise that most of New Zealand's rapid increase in inequality happened from 1985-95, during the time of radical reforms. The Gini coefficient peaked in 2000 and actually dropped by 1 point during the Helen Clark years of 2000--08.

It would be interesting to see some more detailed analysis of the changes in income distribution in New Zealand, perhaps with a nice graphical display like this. To what extent is increasing inequality about the educated upper middle class surging ahead, and to what extent the top few capturing most of the gains? To what extent is it related to upwards distribution of pre-tax incomes and to what extent a more regressive tax and transfer system?

No comments: