Estimating the Distribution of Income in the Northern Territory

Question: Discuss about theEstimating the Distribution of Income in the Northern Territory. Anwer: Introduction: Income distribution is the equality with which income is dealt out among members of a given society (Levy, 2008). Usually, the income distribution of a society falls between equal and unequal. The variation in income is a common feature in all economies including that of the including that of the Northern Territory orNew Zealands North Island. Individuals and households will earn different incomes at any given point, leading to uneven distribution of incomes.typically, tThe income differences are as a result of several factors including individual choices and personal characteristics- like intelligence, age, and choices on makes in regard to work/life balance- as well as inheritances and opportunities. These personal differences together with the wider economic and policy factors affect the distribution of income overtime. A company interested in estimating the distribution income of the Northern Territory or of New Zealands North Island, will not only measure and analyze the distribution income, but will also analyze the inequality in incomes (Meagher Wilson, 2008). This paper determines how a company can determine the distribution income at both the individual and the household level of the Northern Territory or of New Zealands North Island over a given time period. Technically, the company should explore the distributional changes together with the changes in measures of income unevenness, like the Gini coefficient (World Bank, 2012). Accordingly, the build-up approach to income can be employed, first investigating the individual income followed by the household income. This facilitate the tracing of influential aspects, such as individual returns obtained from taking part in the workforce, across the household income typically affected by a greater set of government policy, social, and demographic factors (Greenville, Pobke and Rogers, 2013). In so doing, the company can explore in detail the distribution of income from multiple relevant sources and sub-sections of the population, with a specific focus on working hours, employment types, transfers and taxes, hourly wages, and household members. Figure 1: The Buildup Approach Income Source: Greenville, Pobke Rogers (2013) Figure 1 shows the populations sub-sections and the income sources that the company can examine. The buildup approach also assists in providing insights into the changes in summary distribution- like the widely accepted Gini coefficient. Similarly, this approach also depicts the necessity for keenness when handling evaluations based on summary measures of this nature. The company estimation can utilize data from the Household Expenditure Surveys (HESs) of the Australian Bureau of Statistics, developed within the year. The resulting estimation, therefore, will be limited to that specific time frame and will be dependent on the specific factors of the initial and closing points, like the prevailing demographics, social and economic conditions. HES encompass data on indirect and direct government taxes and transfers, making it a reliable source of data in examining the various components of income in detail. References Greenville, J., Pobke, C. and Rogers, N., 2013.Trends in the Distribution of Income in Australia. Melbourne: Productivity Commission. Levy, F., 2008. Distribution of income (2nd Ed).The fortune encyclopedia of economics, pp.177-183. Meagher, G. and Wilson, S., 2008. Richer, but more unequal: Perceptions of inequality in Australia 1987-2005, Journal of Australian Political Economy, issue 61, pp. 22043. World Bank, 2012. GINI Index, World Development Indicators, https://data.worldbank.org/indicator/SI.POV.GINI (accessed 21 August 2012).