Measuring poverty and inequality from highly aggregated small-area data: The changing fortunes of Latrobe Valley households

Using census data, we analyse inequality and poverty levels for the coal-rich region of Latrobe Valley between 1986 and 2006, a period incorporating industry restructuring, recession and subsequent growth. To enable the analysis using limited information, we propose a method for using grouped data to obtain income distributions for small areas. Unit record data are used to validate the methodology. We find that welfare in the region deteriorated between 1986 and 1996, in line with national and regional trends. However, between 1996 and 2006, when the national economy grew strongly and many regions started to prosper again, welfare in the Valley continued to deteriorate.