tag:blogger.com,1999:blog-5404820640426099135.post1873527591969905993..comments2023-10-31T00:46:35.316+13:00Comments on Anti-Dismal: Closing the trans-Tasman income gap will take time (update x2)Paul Walkerhttp://www.blogger.com/profile/13731003529546075700noreply@blogger.comBlogger8125tag:blogger.com,1999:blog-5404820640426099135.post-9327223096156537812008-09-17T14:36:00.000+12:002008-09-17T14:36:00.000+12:00"Why are we interested in growth relative to Austr..."Why are we interested in growth relative to Australia though"<BR/><BR/>We are looking for a counterfactual. We want to have a guide as to what our growth rate could have been if we had done things differently. Australia isn't the perfect counterfactual, for a number of reasons, but it is the most commonly used one. And it's not obvious what a better one would be. Ireland?Paul Walkerhttps://www.blogger.com/profile/13731003529546075700noreply@blogger.comtag:blogger.com,1999:blog-5404820640426099135.post-52797540743438695542008-09-16T09:49:00.000+12:002008-09-16T09:49:00.000+12:00"I see this at root as a growth issue"Why are we i..."I see this at root as a growth issue"<BR/><BR/>Why are we interested in growth relative to Australia though - it makes as much sense as me concerning myself with my wage growth relative to the wage growth of a plumber (or some other unrelated discipline).<BR/><BR/>If we think it tells us that there is something we are doing wrong - if we believe that we can sustain the same rate of growth as the Aussie then fine. However, that is an assumption that should be justified.<BR/><BR/>The NZIER study said that it was interested in "average living standards" and "migration" - if that is the case then why don't they look at statistics that compare average living standards? GDP per capita is not the best measure of this - and the best measure are available, why didn't they use them?Matt Nolanhttps://www.blogger.com/profile/05615455113796090765noreply@blogger.comtag:blogger.com,1999:blog-5404820640426099135.post-78538192412359146492008-09-15T13:32:00.000+12:002008-09-15T13:32:00.000+12:00I see this at root as a growth issue. We haven't b...I see this at root as a growth issue. We haven't been growing at the rate that Australia has been. GDP per capita is an standard measure in such circumstances.Paul Walkerhttps://www.blogger.com/profile/13731003529546075700noreply@blogger.comtag:blogger.com,1999:blog-5404820640426099135.post-16849605903574158272008-09-15T08:21:00.000+12:002008-09-15T08:21:00.000+12:00"such work will only be undertaken once people rea..."such work will only be undertaken once people realise we are getting relatively poorer"<BR/><BR/>Even if this was the question they were looking at I'm not sure that GDP per capita does the trick - unless we can account for the different resource endowments (and thereby the differing composition of the economies).<BR/><BR/>If one person is less skilled than another, we don't bemoan the fact they are getting paid less - why should we care in the case of entire nations? Part of this view may stem from my belief that government can do very little to actually improve economic outcomes :P<BR/><BR/>Furthermore, they justify the study as a way of looking at migrant outflows - GDP per capita is an incredibly misleading way of looking at that issue, median household salary would be a more appropriate measure (given that is what drives the decision).<BR/><BR/>Sure there is a relationship between GDP per capita and median household salary - but why use an inexact proxy when you have the actual figure of interest?Matt Nolanhttps://www.blogger.com/profile/05615455113796090765noreply@blogger.comtag:blogger.com,1999:blog-5404820640426099135.post-71934975131281489762008-09-14T13:28:00.000+12:002008-09-14T13:28:00.000+12:00The point about the use of GDP per capita is that,...The point about the use of GDP per capita is that, while not the perfect measure, it signals to us there is a problem and realising that a problem exists is the first move in fixing it. The gap between GDP per capita in New Zealand and Australia says to me we are doing something wrong. More detailed work, along the lines you suggest, is need to work about exact what is wrong but such work will only be undertaken once people realise we are getting relatively poorer. This is the point emphasised by looking a measure such as GDP per capita.Paul Walkerhttps://www.blogger.com/profile/13731003529546075700noreply@blogger.comtag:blogger.com,1999:blog-5404820640426099135.post-26404571455885393052008-09-12T14:44:00.000+12:002008-09-12T14:44:00.000+12:00"As a first approximation GDP per capita seems a r..."As a first approximation GDP per capita seems a reasonable measure of average income"<BR/><BR/>I'm not sure its the first measure I would go to when discussing wage gaps because of the compositional differences in the economy.<BR/><BR/>I would be more interested in looking at the professions where a "wedge" in wages exists - and trying to figure out why.<BR/><BR/>"And most people would prefer a higher GDP per capita to a lower one."<BR/><BR/>All other things equal, definitely. <BR/><BR/>However, GDP per capita assumes we are comparing like with like, which we are not.<BR/><BR/>Using a median at least gets rid of outliers - and gives us a better idea of how the "average" person is feeling.Matt Nolanhttps://www.blogger.com/profile/05615455113796090765noreply@blogger.comtag:blogger.com,1999:blog-5404820640426099135.post-84444911951560327362008-09-12T14:37:00.000+12:002008-09-12T14:37:00.000+12:00As a first approximation GDP per capita seems a re...As a first approximation GDP per capita seems a reasonable measure of average income. Clearly the distribution of income in each country is important but GDP per capita still give useful information. And most people would prefer a higher GDP per capita to a lower one.Paul Walkerhttps://www.blogger.com/profile/13731003529546075700noreply@blogger.comtag:blogger.com,1999:blog-5404820640426099135.post-72866355285738890672008-09-12T14:24:00.000+12:002008-09-12T14:24:00.000+12:00"New Zealand’s average income, defined as GDP per ..."New Zealand’s average income, defined as GDP per capita"<BR/><BR/>This is tenuous. It only makes sense as a comparison if the income distribution is the same between countries - which it is not.<BR/><BR/>Furthermore, the paper states that it is looking at the issue because the "wage gap" is so important - but there is a huge difference between household income and national income.<BR/><BR/>To work out "income gaps" they should have used an income measure instead of a production measure - such as median household income.Matt Nolanhttps://www.blogger.com/profile/05615455113796090765noreply@blogger.com