The New Zealand Institute of Economic Research (NZIER) has today released a new Insight titled “Peak Inequality – New Zealand’s False Truth”. The Insight is based on new data and shows that despite popular opinion, income inequality in New Zealand hasn’t changed in the past 20 years, and it’s been at the current level before.
Derek Gill, a Principal Economist from NZIER, said “The data tells us that our current level of income inequality is actually the same as it was in the 1930s and 1940s. A real concern is poverty and how this leads to reduced social mobility. Social mobility is not necessarily related to income inequality.”
NZIER are absolutely right. What we should care about is helping families so they don’t spend their lives in poverty. But that is very different to inequality which is comparing the wages of a 16 year old unskilled shop assistant to a 45 year old professional and complaining they are not the same.
Gill would like to see the debate focus more on poverty and how that limits social mobility. In a place where social mobility is limited, people stay poor and have very few opportunities to improve their situation.
Yep which is why social investment strategies are so important – spend money early on to give them opportunities.
Their paper includes this chart. So powerful. If there is a Labour/Green Government at some stage I predict the number of articles will fall away again.
So not only has inequality not increased in the last 25 years, it is at the same level as the 1950s and before.
Whether inequality is a problem depends upon how you come at the issue. It is hard to find any people who think inequality is good. Equally it is hard to find any anyone who thinks all inequalities are bad. Adding additional surgeons and other highly skilled people to the workforce would increase inequality. But most Kiwis would see
that as a good thing. It is important to understand what factors have driven any changes in inequality to understand whether these are ‘good’ or ‘bad’.
A key point.