Measuring Inequality for Small Areas Using Spatial Microsimulation: An Australian Case Study

In this paper, we have used spatial microsimulation techniques to calculate small area inequality in Australia using disposable income data which are not available at a small area level. Applying this technique, household synthetic data at small area level are created, drawing together data from the Australian Census and Survey. Using disposable income increases the strength of the results, as a more accurate measure of income distribution is able to be obtained. Small area inequality estimation enables the policy maker to pinpoint pockets of inequality and to link these with other small area characteristics. Further, a case study of New South Wales, the most populous state in Australia is analyzed and the results show that there are marked differences in what appears to be associated with variation in inequality between urban area (Sydney) and rural areas highlighting the complexity of income inequality at a small area level.