Part of the reason why we get such conflicting narratives about whether it’s rising or falling is that economic inequality can be measured in different ways, using different data sets.
And you might get a different answer depending on whether you’re talking about income inequality or wealth inequality. Income is the flow of economic resources over a certain time period, while wealth is the stock of resources built up over time.
We can draw some insights from the newly released Household Incomes and Labour Dynamics in Australia (HILDA) 2017 report, which reveals the latest results of a longitudinal study that has been running since 2001.
But it doesn’t show the whole story. Combining HILDA’s results with data from the Australian Bureau of Statistics’ income surveys gives a more comprehensive picture of trends in economic inequality in Australia.
HILDA data show lower income inequality than the ABS
Firstly, you need to know that when we are talking about income, most people are referring to the disposable income of the household, not individuals.
That’s all the income that members of a household receive from various sources, minus tax. You can then then adjust for the number of people in the household, accounting for the differing needs of adults and children to get what economists call “equivalised household disposable income”.
The HILDA survey, funded by the Department of Social Services and conducted by the Melbourne Institute, has followed some 17,000 individuals every year since 2001. (The most recent ABS income surveyfinal sample consists of 14,162 households, comprising 27,339 persons aged 15 years old and over.)..(continues)
SOURCE: Peter Whiteford, “Here’s why it’s so hard to say whether inequality is going up or down”, The Conversation, 02 August 2017
Produced by the librarians at the Brotherhood of St Laurence in Melbourne, Australia