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What is the movement of people between income levels across time?
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Two potential data sources for answering this question are the Linked Employer-Employee Dataset (LEED) person-level and the Survey of Family Income and Employment (SoFIE). Both are longitudinal datasets. This longitudinal nature enables an exploration of the movement of people between income levels over time. These datasets are the only two sources of income data produced by Statistics New Zealand that allow for this kind of analysis. The advantages and disadvantages of using person-level LEED or SoFIE data are outlined below.
Linked Employer-Employee Dataset (LEED) person-level data
Advantages of using LEED person-level data:
- Longer time series: The LEED offers a longer time series than the SoFIE. The LEED goes back to the year ending 31 March 2000, whereas the SoFIE goes back to the year ending 30 September 2003.
- Accuracy: The LEED person-level data release uses administrative rather than survey data and has full population coverage of those registered with Inland Revenue. For this reason, LEED person-level data is not subject to sampling error and is particularly accurate.
Disadvantages of using LEED person-level data:
- Does not include non-taxable income: LEED person-level data only covers taxable income. It does not include income from non-taxable sources such as tax credits and non-taxable government transfers (for example the disability allowance or the accommodation supplement).
- No household income: LEED person-level data does not provide data on household income. It only provides data on personal income.
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Survey of Family Income and Employment (SoFIE)
Advantages of using SoFIE data:
- Includes non-taxable and taxable income: Because the SoFIE data includes both taxable and non-taxable income, it provides a more comprehensive range of income sources than LEED person-level data.
- Provides family and household income: SoFIE data provides personal, family and household income measures, whereas LEED person-level data only provides data on personal income.
Disadvantages of using SoFIE data:
- Shorter time series: SoFIE data offers a shorter time series than LEED person-level.
- Data less easy to access: SoFIE data is less easy to access than LEED person-level as much of the SoFIE data is not posted on the Statistics NZ website.
- Sampling error: SoFIE is a sample survey and for this reason is subject to sampling error. Sampling error arises when data are collected from a part, rather than the whole, of the target population.
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