Measuring Poverty and Inequality from Highly Aggregated Small Area Data: The Changing Fortunes of Latrobe Valley Households

The Latrobe Valley generates 85% of Victoria's electricity. The progressive privatisation of the electricity industry between 1989 and 1997, had a lasting effect on income distribution in the region. This paper investigates the change in income level, inequality and poverty for this region between 1986 and 2006. To circumvent data availability issues, we propose a general method of using aggregated data to obtain regional income distributions. We find that in 1986 Latrobe Valley incomes were well above other non-metropolitan areas while inequality measures were relatively low. Mean income subsequently dropped below comparable locations while inequality rose. Although income levels had partially recovered by 2006, inequality measures continued to rise.