The effectiveness of the transfer and tax system in reducing poverty in 1998

Robert Stephens, Charles Waldegrave

The paper analyses the incidence and severity of poverty, measured by income inadequacy, for the year to April 1998. Using various ways of categorising households based on Statistics New Zealand’s Household Economic Survey, the paper shows which household groups are most likely to have inadequate incomes, the extent to which those households fall below three different low-income thresholds, and the effectiveness of net social security transfer payments in reducing the incidence and severity of poverty.

The initial level of the income adequacy threshold was calculated through focus group discussion. The thresholds and poverty measures have been analysed on the basis of disposable income, adjusted for family size and composition, and after adjusting disposable income for relative housing costs.