The NZ top 1% share has been steady at 8-9% since the mid-1990s. It was only in the USA the top 1% share continued to rise strongly, from 13% to 19%.

Figure 1: Top 1% income shares, USA, New Zealand and Sweden, 1970-2012

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Source: The World Top Income Database at http://topincomes.g-mond.parisschoolofeconomics.eu/#Database

The top 1% in New Zealand is so lazy that Sweden is overtaking it – See figure 1.

The Occupy crowd blame everything from the global financial crisis to a bad environment on growing inequality and the top 1%. Such an argument has no foundation in fact in New Zealand.

Income inequality as measured by the Gini coefficient has not risen in New Zealand for 20 years – See figure 2.

Figure 2: Gini coefficient New Zealand 1980-2015

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Source: Bryan Perry, Household incomes in New Zealand: Trends in indicators of inequality and hardship 1982 to 2013. Ministry of Social Development (July 2014).

The last major increase in income inequality in New Zealand was  in the late 1980s and early 1990s and followed by a long economic boom – See figure 3 .

Figure 3:  Real GDP per New Zealander and Australian aged 15-64, converted to 2013 price level with updated 2005 EKS purchasing power parities, 1956-2012

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Source: Computed from OECD Stat Extract and The Conference Board, Total Database, January 2014, http://www.conference-board.org/economics .

This was after two decades of next to no economic growth in the 1970s and 1980s. This depression between 1974 and 1992 was New Zealand’s lost decades.

Both the lost decades of growth in New Zealand and the emergence of the trans-Tasman income gap also seemed to somewhat coincide with the top 1% of earners in Australia increasing their share from 6% to 10% of total incomes while the New Zealand top 1% sat on their hands.

Figure 4: Top 1% income shares, USA, New Zealand and Australia, 1970-2012

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Source: The World Top Income Database at http://topincomes.g-mond.parisschoolofeconomics.eu/#Database

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Image  —  Posted: October 25, 2014 by Jim Rose in administration

Friday Funny – You’re a climate denier if:

Posted: October 25, 2014 by Jim Rose in economics

Originally posted on Watts Up With That?:

By Mark Heyer – You’re a climate denier if:

– You believe that the atmosphere has continued to warm for the last 17+ years despite rapid growth of CO2. 97% of real climate scientists acknowledge that it hasn’t. They call it the “pause” or “hiatus” although there is no scientific evidence that warming will pick up again or when.

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– If you believe that Antarctica is melting. NASA satellite data shows that the sea ice extent around Antarctica in 2014 is the largest in recorded history.

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– If you believe that the observed West Antarctica warming is caused by warming of the atmosphere. Recent studies show that the heat is coming from volcanoes below the glacier. Besides, air temperatures in the area are far below zero. Ice doesn’t melt in subfreezing air.

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– If you believe that 97% of climate scientists support the claim that global warming is driven directly…

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Image  —  Posted: October 25, 2014 by Jim Rose in applied welfare economics, economics of regulation, health economics, Sam Peltzman
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Image  —  Posted: October 25, 2014 by Jim Rose in classical liberalism
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Image  —  Posted: October 25, 2014 by Jim Rose in discrimination, gender, human capital, labour economics, labour supply, occupational choice
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Image  —  Posted: October 24, 2014 by Jim Rose in economics of regulation, labour economics
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Elinor Ostrom and the Future of Economics

Posted: October 24, 2014 by Harvard Business Review in economics

Originally posted on HBR Blog Network - Harvard Business Review:

Exit, crisis. Enter, surprise: it’s the most unexpected economic Nobel, bar none. Oliver Williamson and Elinor Ostrom are both scholars first and foremost of instutions ? and as Paul Krugman has noted, this is an “institutional” Nobel.

The crux of both Williamson’s and Ostrom’s work is that institutions are what make economics happen. Different institutional arrangements give rise to tremendously different modes of production and consumption, that, turn, differ in terms of efficiency, productivity, and growth.

Williamson was a refreshing choice. His work suggested that the costs of interacting and transacting influence the choice between different modes of organization: markets, hierarchies, and networks.

But Ostrom is a radical ? and awesome ? choice. Not just because of the “what” of her work, but, more deeply, because of the “how” of it. Ostrom’s work is concerned, fundamentally, with challenging Garret Hardin’s famous Tragedy of the Commons, itself a…

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FRIDAY GRAPH – MULTI-FACTOR PRODUCTIVITY GROWTH

Posted: October 24, 2014 by Jim Rose in economics

Originally posted on Roger Kerr, New Zealand Business Roundtable Executive Director:

If there were one chart I would use to illustrate the story of New Zealand’s economic performance over the last 25 years, this would be it.

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The chart is taken from a presentation to a Business Roundtable retreat last month by Dr Roderick Deane (the presentation is on our website).

It illustrates the trend in multifactor productivity growth, which is perhaps the most important productivity measure.  MFP captures productivity changes (due to things like innovation and technology improvements) that cannot be attributed to capital and labour.

The story is that New Zealand’s multifactor productivity performance improved dramatically, to become among the best in the OECD,  in the post-reform period.

Then, for all the Labour-led government’s talk about ‘growth and innovation’, it slumped in the last decade, with the retreat from reform and policy reversals, to a rate not seen since the Muldoon years.

There is still far…

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Image  —  Posted: October 24, 2014 by Jim Rose in George Stigler, Public Choice, rentseeking
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