Income bands are created by taking the average monthly of the existing workforce across months where they are working within the sector of interest. Of these average monthly earnings we create quartiles bands and group the existing workforce and new entrants into each group.
A new entrant is classified as an individual who first starts working (earning income in IRD records) within a given sector (defined through employer ANZSIC 2006 codes). We take new entrants in the sectors we follow between the years of 2007 and 2017, and categorise them into source groups using the following hierarchy:
- Secondary leaver (enrolled within one year of starting work)
- Tertiary graduate (enrolled within one year of starting work)
- Career changer (at least one year of work experience within any other sector)
- Immigrant (first arrived in New Zealand within one year)
- Beneficiary (history of beneficiary income)
- Returning kiwi (return date to New Zealand within one year)
- Others and unknowns
Such that a new entrant recently enrolled in tertiary education with more than one year of work experience is classified as a tertiary graduate as opposed to a career changer.
Within IRD data there is no available information on the number of hours worked, only income down to a monthly level. Because of this we only consider an employee to be employed in a given month if they earn more than the equivalent of 0.5 FTE (80 hours) on the minimum wage. Thus for 2007 (minimum wage of $11.25) only months with income over $900 as employed.