Research into New Zealand income mobility and deprivation

The Treasury welcomes the release of research published today from Otago University that looks at income mobility and deprivation in New Zealand.

The work provides evidence on the degree to which New Zealanders' income levels have changed over time, assists a better understanding of persistent low income and deprivation in New Zealand and helps policy-makers to better understand income mobility and persistent deprivation.

Treasury Manager, Nic Blakeley, says this study is an important contribution to the Treasury's broader work on living standards. Improving living standards for New Zealanders is the foundation of the Treasury's policy advice to the Government.

Mr Blakeley says Treasury advice emphasises reducing deprivation and promoting mobility for individuals to assist them to make the most of life chances. This report shows that focusing on current low incomes can miss a much richer story of how people's incomes change over time. Policy needs to be designed to ensure that people do not face barriers to improving their circumstances.

The research report, by Dr Kristie Carter and Dr Fiona Imlach Gunasekara of the Public Health Department at the University of Otago, examined longitudinal survey data collected in Statistics New Zealand's annual Survey of Family, Income and Employment (SoFIE).

The research indicates there was substantial income mobility over the period examined with both upward and downward income mobility. For example, only a quarter (24%) of those whose income was assessed to be in the bottom income decile in 2002 were in that decile in 2009. For those in the top income decile at the start of the study, however, almost half (46%) were there in 2009. These results are comparable to countries like Australia and the United Kingdom and are not explained by retirement from the paid workforce or entry and exit from education.

Treasury's briefing to the Minister: http://www.treasury.govt.nz/publications/informationreleases/income-deprivation.

'Dynamics of Income and Deprivation in New Zealand 2002-2009' is available at: http://www.otago.ac.nz/wellington/research/hirp/projects/otago020394.html.