The Suffering Middle: Trends in Income Inequality in Australia, 1982 to 1993–94

This article analyses labour force trends, household composition and income inequality between 1982 and 1993–94, principally using unit record tapes for the two years produced by the Australian Bureau of Statistics. The results suggest that earnings and private income inequality increased during these 11 years. However, increasing progressivity in the income tax and, in particular, the government cash transfer system fully offset this growing market-based inequality. Summary inequality measures thus suggest that the distribution of disposable (post-tax/transfer) and equivalent disposable income was much the same in 1993–94 as in 1982. However, this apparent stability disguised real income gains at the top and bottom of the income spectrum and losses for the middle 50 per cent of Australians.