Abstract:
This paper examines whether changes in New Zealand income inequality can be attributed to the shares of national income taken by capital and labour. Data on income inequality aggregates both capital income (rents, interest, profits) and labour income (wages and salaries). It is possible that changes in inequality correspond only to changes within the distributions of capital income and labour income, and that a rhetoric which emphasises the struggle between capital and labour is misguided. We find this is not the case: both an econometric analysis of income shares and a historical analysis of major policies demonstrates that the struggle between capital and labour matters.
