Wage inequality and neoliberalism: The Australian experience

Abstract

This article examines wage inequality in Australia from 1982 to 2012 using income distribution data from the Australian Bureau of Statistics. The analysis shows that wage inequality grew steadily during this period, and that the growth was particularly strong from 1996 onward. Through the use of quantile regression it is possible to decompose the growth in inequality into three components: changes in the wage structure, changes in workforce characteristics and a residual (‘unobservables’). The results of this analysis are conclusive among male full-time employees: despite the conventional wisdom that the changing nature of the workforce contributed to the growth of inequality, I find that the changes in the wage structure accounted for more than three-quarters of this growth. In the case of female full-time employees, changes in the wage structure accounted for about half of this growth. The article locates these findings within an analysis of neoliberalism in Australia and suggests that deindustrialisation and financialisation appear to be closely related to increased wage inequality.