Income inequality and mobility in Australia over the last decade

Transcription

1 Income inequality and mobility in Australia over the last decade Roger Wilkins Meeting of National Economic Research Organisations, OECD Headquarters, 18 June 2012

2 $, December 2011 prices Context: Sustained strong growth in household incomes Median annual equivalised disposable income, Australia (All persons) HILDA Survey Australian Bureau of Statistics Income Surveys

3 Income inequality Gini coefficient - Equivalised disposable income ABS weekly

4 Income inequality Gini coefficient - Equivalised disposable income ABS weekly ABS 'consistent' annual series

5 Income inequality Gini coefficient - Equivalised disposable income ABS weekly ABS 'consistent' annual series HILDA Survey

6 Top incomes Tax and National Accounts data Income share of the top 1% (Persons aged 15 and over) % With realised capital gains Without capital gains 4

7 Income poverty Proportion below half of median equivalised income ABS (annual income) HILDA Survey 0.08

8 Drivers of changes in inequality Market income 0.49 Gini coefficient for equivalised 'market' income ABS income surveys HILDA Survey 0.43

9 Drivers of changes in inequality - Earnings Gini coefficient for annual labour market earnings (Employed persons) ABS income surveys HILDA Survey

10 Drivers of changes in inequality Government taxes and transfers 0.18 Effect of government income taxes and transfers on the Gini coefficient (Equivalised income) ABS income surveys HILDA Survey 0.12

11 Drivers of changes Fiscal stimulus direct payments Effects of government 'bonus' payments delivered as part of fiscal stimulus - Equivalised income Percentiles Mean 10th 25th 50th 75th 90th Gini Income before bonuses 41,880 16,000 24,845 37,462 53,053 71, Income after bonuses 43,441 17,772 27,024 39,204 54,120 72, Effect of bonus payments 1,561 1,772 2,179 1,742 1,067 1, Source: HILDA Survey

12 Permanent income inequality 0.3 Gini coefficient for five-year equivalised disposable income (Gini coefficient for annual income is approximately 0.31) Source: HILDA Survey

13 (Intra-generational) Income mobility Shorrocks R Shorrocks R: Ratio of multi-year income inequality to a weighted average of single-year inequality values. It is interpreted as the ratio of permanent inequality to total inequality over a given period. If there is no transitory component to inequality, R = 1. If all inequality is transitory, R = 0 (i.e., everyone has the same permanent income). Five-year Shorrocks R for Theil index Australia US Germany UK (6-year) Note: UK measure is not completely comparable. Sources: Australia: HILDA Survey; US and Germany: Bayaz-Ozturk, Burkhauser & Couch (2011) using PSID (US) and SOEP (Germany); UK: Jenkins (2011) using BHPS.

14 Five-year income mobility Mean change in percentile rank Non-elderly couple Couple with children Sole parent Non-elderly single man Non-elderly single woman Elderly couple Elderly single man Elderly single woman Mean absolute five-year change in percentile rank All persons Source: HILDA Survey

15 Two-year mobility Mean change in percentile rank from one year to the next Average to to to Mean absolute change Change by family type Non-elderly couple Couple with children Sole parent Non-elderly single man Non-elderly single woman Elderly couple Elderly single man Elderly single woman Change by initial quintile of the income distribution Bottom quintile nd quintile rd quintile th quintile Top quintile Source: HILDA Survey

16 2-speed economy? Mean change in percentile rank over five years Non-mining states Mining states Western Australia Mining states: Western Australia and Queensland (about 30% of population) Western Australia is about 10% of the population Source: HILDA Survey

17 DEC JUN DEC JUN DEC JUN DEC JUN DEC JUN DEC JUN DEC JUN DEC JUN DEC JUN DEC JUN DEC JUN DEC JUN DEC Some more recent evidence on household incomes Real quarterly (seasonally adjusted) household disposable income per capita (indexed to 1 in December 1999) Sources: ABS National Accounts (Cat.No ), ABS Consumer Price Index (Cat. No ) and ABS Demographic Statistics (Cat. No )

18 (e) (e) (e) (p) (p) Australian Government Budget - Underlying cash balance as a percentage of GDP Source: Australian Treasury Budget Papers, May 2012

19 Jan-00 Jun-00 Nov-00 Apr-01 Sep-01 Feb-02 Jul-02 Dec-02 May-03 Oct-03 Mar-04 Aug-04 Jan-05 Jun-05 Nov-05 Apr-06 Sep-06 Feb-07 Jul-07 Dec-07 May-08 Oct-08 Mar-09 Aug-09 Jan-10 Jun-10 Nov-10 Apr-11 Sep-11 Feb-12 Labour market is flat Unemployment rate and employment-population rate, Australia (%) Unemployment rate Employment-population rate Source: ABS Labour force, Australia (Cat. No )

20 Mar-2002 Sep-2002 Mar-2003 Sep-2003 Mar-2004 Sep-2004 Mar-2005 Sep-2005 Mar-2006 Sep-2006 Mar-2007 Sep-2007 Mar-2008 Sep-2008 Mar-2009 Sep-2009 Mar-2010 Sep-2010 Mar-2011 Sep-2011 Mar-2012 Median house price, Australia (real, indexed to 100 in March 2002) Sources: ABS House Price Indices (Cat. No ) and ABS Consumer Price Index (Cat. No )

21 Summary Relatively strong household income growth has continued Inequality probably increased leading up to 2008, although magnitude is uncertain. To a significant extent the increase was because of a decline in progressivity of income taxes and transfers Inequality decreased temporarily in , mostly because stimulus payments Income mobility appears to be relatively high in Australia, and does not appear to have been much affected by the economic downturn Looking forward, household income growth over the next few years is likely to be lower than has been sustained in recent years, but outlook for inequality is less clear