Rising inequality? A stocktake of the evidence

Inequality — The long view, we've done better than we think

A Commission-initiated Productivity Commission report on inequality shows that the past 27 years of sustained growth have delivered significantly improved living standards for the nation and for most of us individually but that poverty remains unchanged.

'Inequality in Australia is a topic that draws diverse and competing views. Yet unlike economic growth, no single metric is going to be definitive.'

'While the perception often is that the glass is half empty, the most accurate picture that can be drawn from the data suggests that each generation is still better off than its predecessor, and that movements in inequality indexes are slight rather than serious,' Productivity Chair Peter Harris said.

The report brings together and takes stock of the latest and most complete evidence measuring the level of and trends in inequality, mobility and persistent disadvantage in Australia.

'It was important that we not just look at the distribution of income in assessing inequality, but consider wealth and consumption too. For example, many retirees live on low incomes, but have high wealth. And many young adults have higher consumption than income,' Commissioner Jonathan Coppel said.

The reports shows that Australia's tax and transfer systems substantially reduce income inequality and that relative to other OECD countries, Australia redistributes less income, but does a much better job of targeting this redistribution to low income earners.

The report also looks at economic mobility — the gauge of whether the rich always remain rich, and the poor always poor. A healthy level of mobility is an indicator of economic opportunity. Mobility in Australia is higher than in most OECD countries — there is widespread movement across the income levels; around 75% of people in the top income group had moved to lower income groups 15 years later.

But the rate of poverty in Australia is still about 9 per cent despite many years of economic growth, and persistent disadvantage for a proportion of people in this group remains unaddressed.

The Productivity Commission's report Rising inequality? A stocktake of the evidence can be found at www.pc.gov.au

R scripts and datasets

The R scripts and related files necessary to replicate most of the calculations and figures found within the Commission Research Paper are available below.

R is a freely available statistical programming language.

Download R software

To run the R scripts fully, the user must first obtain access to the following datasets:

ABS Basic CURFs for each of the Household Expenditure Surveys (HES) from 1988-89 to 2015-16

Apply to access ABS dataset

HILDA Survey Release 16 in general or restricted form

Apply to access HILDA dataset

In downloading the below scripts you are accepting the following conditions:

• The Commission does not provide support to users of these scripts.
• The Commission accepts no liability for potential errors in the scripts.
• Users of the scripts, including users that derive new variations of the scripts, should acknowledge the Productivity Commission with words in an introductory or acknowledgements section or in a footnote to the effect of: ‘This work benefited from data analysis scripts developed at the Productivity Commission in the context of a paper entitled Rising inequality? A stocktake of the evidence (PC 2018)’
• An appropriate reference for this publication is: Productivity Commission 2018, Rising inequality? A stocktake of the evidence, Commission Research Paper, Canberra.

Download HES scripts

• Household Expenditure Surveys R files (ZIP - 29.2 KB)

Download HILDA scripts

• HILDA R files (ZIP - 35.1 KB)

Download data inputs

• Consumer Price Index (CPI) (Excel - 11.3 KB)
• Wealth Ginis 2017 (CSV - 521 B)
• Earnings elasticities (CSV - 184 B)
• US intragenerational income mobility (CSV - 211 B)
• OECD wealth means and medians 2017 (CSV - 967 B)