A Gap for Closing

Maori incomes are catching up, but there’s a long way to go.

Listener: 7 April, 2007.

Keywords: Distributional Economics; Maori;

Sometimes I am proud of New Zealand’s achievements in race relations. Not that they are perfect; far from it. But we try, we acknowledge our past failures (sometimes reluctantly) and we can be willing to incorporate ethnic diversity into the texture of the nation.

When I look at the economic data, I am less complacent.

In the March 10 columnMarch 10 column, I discussed inequality in New Zealand. The population censuses suggest that since 1991 the income of the top quintile (or fifth) has been growing faster than that of those lower down, although the trend seems to have been checked a little in the past five years.
The following columnfollowing column, on March 24, pointed out that there had been little real income growth for those in the bottom quintile. Our brown ethnic minorities are more in the bottom than the top of the income distribution.

Thus far the 2006 Population Census has published data only for Maori and everyone (figures for other ethnic groups will be published later). The data shows that 23.7 percent of Maori are in the bottom quintile of all of us, and so are over-represented among the poor.

They are under-represented among those with high incomes; only 12 percent of Maori are in the top quintile. (The detailed statisticsThe detailed statistics.)

Comparing the Maori and non-Maori populations is tricky, because the age structures are different. I checked whether the relative youth of the Maori population affected the results, using the 2001 Census, as the 2006 age cross-tabulations are not yet available. It turns out that the younger Maori population does matter when comparisons are made at the bottom. But it only narrows the difference and does not eliminate it.

At the top of the distribution, the age structure makes no difference; those who report themselves as ethnically Maori (completely or partly) are less likely to have high incomes irrespective of their age.

I was surprised to see in the US Population Census for 2000 that 12.2 percent of blacks are in the top fifth, as are 11.8 percent of Hispanics. International comparisons can be treacherous, but the implication is that Maori are not relatively better-off than the large ethnic minorities in the US.

As disappointing as the lack of high-income Maori is, there is a little comfort in the fact that the incidence has been rising. In 1991, the proportion of Maori in our top income quintile was only 10.8 percent, so there has been a 1.2 percentage point improvement over the 15 years. That is small compared to the gap. At that rate of progress the 2071 Census will report the same proportion of Maori in the top income brackets as the population in general. It’s a creeping catchup.

Why the improvement? “Maori” is a fluid notion. Possibly more New Zealanders, increasingly proud of their Maori ancestry and connections, are identifying themselves as Maori in the Census, perhaps with another ethnicity (as almost half of Maori do). In any case, with intermarriage, a growing proportion of us have Maori ancestry so it is not straightforward to compare Maori in 1991 and 2006.*

Perhaps economic and social forces are unlocking their potential, for there appears to be no inherent reason for Maori being so far behind. If so, the forces grind slow. Nor is it obvious how to speed them up, except by improving Maori health, education and vocational attainment. In the long run, the more who have good quality jobs, the better for Maori incomes.

Maori women tend to have their children at a younger age, which may compromise their chances of obtaining vocational qualifications and work experience, so reducing their earning power later in life.

There may be ethnic differences. Perhaps some Maori put more effort into their whanau and iwi, which may reduce their dollar income but increase their wellbeing and their value to the community. I would be astonished, though, if it explained much of the gap. Iwi-owned wealth could also make a difference, but again not enough to markedly reduce the gap.

As an economist and social statistician I value greatly the public’s (your) responses to the Population Census, but often what you report teases the social scientist.

This column won the freelance journalism award given by Statistics New Zealand for the best use of 2006 Census data. 

* Professor John Gould reminded me that this statement is not necessarily true when there is migration, and has not always been true in recent years because of migration.