DEPARTMENT OF ECONOMICS ISSN 1441-5429 DISCUSSION PAPER 19/15 Measuring Poverty and Inequality from Highly Aggregated Small Area Data: The Changing Fortunes of Latrobe Valley Households Jill Wrightˡ, Ma. Rebecca Valenzuela² and Duangkamon Chotikapanich³ February 2015 Abstract: 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 Valley deteriorated between 1986 and 1996, in line with national and regional trends. However, between 1996 and 2006, when the economy grew strongly and many regions started to prosper again, welfare in the Valley continued to deteriorate. Keywords: Poverty, inequality, restructure, privatization, small-area income distribution JEL Classification Numbers: D31, D63, R13, I32 ˡ Department of Econometrics and Business Statistics, Monash University, Australia ² Department of Economics, Monash University, Australia ³ Department of Econometrics and Business Statistics, Monash University, Australia © 2015 Jill Wright, Ma. Rebecca Valenzuela and Duangkamon Chotikapanich All rights reserved. No part of this paper may be reproduced in any form, or stored in a retrieval system, without the prior written permission of the author. monash.edu/ business-economics ABN 12 377 614 012 CRICOS Provider No. 00008C