Trends in the distribution of income and wealth

(BEST SLIDESHOW)

Income

Personal income is the amount of funds or other benefits, measured in money terms, that flow to individuals or households for the sale of factors of production (usually over a period of time).

For ease, assume that a high income will lead to a high level of wealth.

Wealth

Wealth refers to the value of the stock of assets held by an individual at a particular point in time.

Wealth inequality is harder to measure than income inequality and is generally more unequal as it cannot be redistributed.

Inequality in income and wealth distribution

Some groups in society are affected by inequality more than others, depending on:– Age and Qualifications– Gender and Occupation– Ethnic and Cultural background– Family type– Location.

This graph highlights the extent of income inequality in Australia, with the majority of the population experiencing average weekly incomes between $200 to $1200.However, well over half the population experience incomes less than the mean

income of $644 per week demonstrating that a relatively small number of households have relatively high incomes, while a large number of households have relatively low

incomes.

This graph highlights the extent of wealth inequality in Australia, and that wealth is more unevenly distributed than income. More than half of households have a net worth less than the mean $563,000 however, household wealth has become more even over the last few years.

Age and Education

Income varies over the course of life. It is highest between the ages 25 and 59, generally increasing between those ages. Wealth follows a similar pattern - rising for mot of their lifetime, and falling in the 60-64 years age group.

Obviously, people with more education and experience will hold higher-paying jobs, and thus, have higher levels of income and wealth.

Gender and Occupation

Gender also impacts income distribution with males, on average, experiencing higher incomes than females. In 2005-06 (ABS statistics) females earned an average weekly income 65.5% that of males, with only a slight improvement in equality over the last decade.

Ethnic and Cultural background

English speaking migrants tend to have higher incomes than those born in Australia, as their skills are often in high demand and will greatly benefit the economy, while non-English speaking migrants face the opposite situation.

Family Structure

As suspected, 2003-04 ABS statistics, revealed that Couples without dependant children experienced the highest income and wealth levels ($506 and $402,326 respectively) followed by couples with dependant children, single persons and single parents ($336 and $62,923).

Location

Income and wealth inequality is present between Australia’s states and territories and also between major cities, regional and remote areas.

Distribution of income between states/territories is fairly even, however the ACT is well above the national average. Regional areas experience significantly lower levels of income than remote areas and major cities.