Dimensions of Earnings Inequality in Australia

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Esposto, Alexis S (2005) Dimensions of Earnings Inequality in Australia. PhD thesis, Victoria University.


Over the last three decades, Australia and many other industrialised nations have seen major social and economic changes. For Australia, two of these have been increasing inequality of earnings and the growth in alternative forms of employment arrangements. For the US and a number of other countries, the prevailing explanation for the increase in inequality centres on the notion of skill-biased technological change (SBTC). This view is based on the consensus that technical change favours more skilled workers, as new technologies evolve and are introduced into workplaces. This explanation relates the increases in earnings inequalities to a shift in demand towards highly skilled workers and away from less skilled workers, and centres around the concept and measure of skill. In this context, this thesis investigates three central issues that relate to dimensions of inequality in the Australian labour market. First, has there in fact been increasing skill bias in the demand for labour, and how should skill best be measured in addressing this issue? Second, if increasing skill bias is confirmed, is there any evidence that this increase in relative demand for high skill labour is an important explanatory factor in the rise in earnings inequality? Third, can the increasing role of casual and part-time work in Australia be interpreted as, in substantial part, a response to skill bias in the demand for labour, and as indicative of rising inequality in the labour market? The main findings of the thesis are as follows. For the first question, there is evidence of skill-bias in the demand for labour both in the long and short term in total and full-time employment. Although there was clear evidence of skill bias in full-time employment for men and women, the extent was not homogenous across different job types. Secondly, earnings inequality continued to increase in occupations for men and women between 1989-1995 and 1997-2002, irrespective of the type of inequality measures employed. Moreover, in trying to explain the causes of increasing earnings inequality in full-time work, the analysis found that the O*NET measures of skill and knowledge provided some tentative evidence that supports the skill bias hypothesis in Australia. Thirdly, in the exploration of the relationship between skill bias, alternative job types and earnings inequality, the thesis finds some indicative evidence to suggest that the process of job type creation may imply a new dimension of increasing earnings inequality in the Australian labour market. The broad implications of these findings are tied to both increasing earnings inequality in full-time earnings and in household income inequality. This is particularly so for those households whose majority of members are low skilled and are dependent on casual and part-time work, and who on average work a small number of hours.

Item type Thesis (PhD thesis)
URI https://vuir.vu.edu.au/id/eprint/554
Subjects Historical > Faculty/School/Research Centre/Department > Centre for Strategic Economic Studies (CSES)
Historical > RFCD Classification > 350000 Commerce, Management, Tourism and Services
Keywords earnings; household income; inequalities; inequality; Australia; labour market; skill bias
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