The long-run determinants of Australian income inequality

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Abstract

Recent interest has been stimulated by the growth of income inequality in most developed countries during the 1980s and 1990s. However, considerable uncertainty still exists as to which factors have been the most important causes of this development. This article uses a measure of income inequality derived from taxation statistics and a recently proposed method for testing long-run Granger non-causality to examine the key determinants of Australia's inequality for the years 1970-2001. In line with popular concern, we find that globalisation and technological progress - defined as the global flow of information - has increased income inequality. In contrast, improved terms of trade have been equity-enhancing. Of the institutional determinants, deunionisation has had an adverse effect on income inequality, whereas higher minimum wages have reduced it.

Original languageEnglish
Pages (from-to)260-275
Number of pages16
JournalEconomic Record
Volume85
Issue number270
DOIs
Publication statusPublished - 2009

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Income inequality
Equity
Minimum wage
Technological progress
Terms of trade
Developed countries
Factors
Testing
Statistics
Taxation
Globalization
Granger non-causality
Uncertainty

Cite this

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The long-run determinants of Australian income inequality. / Gaston, Noel; Rajaguru, Gulasekaran.

In: Economic Record, Vol. 85, No. 270, 2009, p. 260-275.

Research output: Contribution to journalArticleResearchpeer-review

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