Ethnic Economic Disparities in New Zealand 1983-97: Application of a New Method for Analysing Subgroup Inequalities Authors

This paper addresses some ethnic dimensions of inequality in the distribution of income amongst New Zealanders over the period 1983/84 – 1997/98, a period characterised by wideranging economic social reforms in New Zealand. The principal method used in the study is a new technique of decomposition of the Gini coefficient of inequality by subgroups of population where the incomes of individuals in the subgroups overlap. In addition to enabling the measurement of within-group and between-group inequalities, this method, recently developed by Podder, can provide answers to policy questions such as whether the existence of income of a particular (ethnic) subgroup raises or reduces the overall inequality; and whether a one-percent rise in income of a particular (ethnic) group increases or decreases the overall inequality and, if so, by how much. New Zealand’s indigenous Maori inhabitants constitute over ten percent of the population, but are often represented disproportionately highly in the nationwide statistics on poverty and unemployment. The economic distance between Maori and the majority European population has always been large. In recent years, new migrants to New Zealand from ‘non traditional-source’ countries have helped increase the ethnic diversity, and raised questions about the economic distances between these groups and New Zealand’s established European and Maori populations. This paper investigates how the incomes of the various ethnic subgroups have changed over the period of the reforms. It also examines the implications for policy of the observed changes. JEL Classification D32