Inequality within and between New Zealand urban areas

Abstract

A better understanding of the drivers of changes in the distribution of personal income continues to be of interest to academics, policy makers and the general public. While the focus has often been on the role of economic factors, socio-demographic factors play an important role as well.

This thesis examines the socio-demographic determinants of changes in the distribution of income in New Zealand urban areas from 1986 to 2013, using data from the Censuses of Population and Dwellings. The thesis examines the role of changes in the age structure, immigration and patterns of educational assortative matching on the changes in the distribution of income over time and across areas.

Multiple decomposition analyses are used to examine the composition and within-group distribution effects of ageing and immigration, while a counterfactual randomisation methodology is used to examine the effect of educational assortative matching.

The results show that inequality has increased in New Zealand urban areas but there is spatial disparity in this trend and in its drivers. Across areas, most of the rise in inequality was driven by increases in the metropolitan areas. Ageing of the population had a downward effect on inequality but widening of the age group-specific distributions has led to overall inequality growth. For immigration, increases in immigrant share have an inequality-increasing effect, but changes in the immigrant group-specific distribution of income are inequality-reducing in non-metropolitan areas and inequality-increasing in metropolitan areas. With respect to the effect of patterns of partnering among male-female couples on inequality, it is shown that educational assortative matching has an inequality-increasing effect on the distribution of total income of couples. Moreover, spatial sorting on observable characteristics such as age, education and location has an inequality-increasing effect as well.