Wage Growth Distribution and Changes over Time: 2001–2018

Abstract

We explore how much wage growth varies among Australian employees and how it has changed over the 2001–2018 period. The results show that, after increasing between 2002 and 2007, wage growth significantly slowed post 2008, and particularly from 2013 onwards, returning to early 2000s levels. Employee age, education, employment contract, occupation and industry explain a large share of differences in wage growth between individuals. Employee occupation is more important post‐2008 than pre‐2008, whereas education is more important pre‐2008. Finally, casual employees receive a wage growth premium during periods of economic upturn and a penalty during downturn.

Income polarisation, expenditure and the Australian urban middle class

“…As evident in Figure 1, growth in pre-expenditure real income has stagnated since 2009. This is consistent with the observation that real wages growth in Australia significantly slowed after 2008 (Kalb and Meekes, 2021).…”

The Evolving Wage Structure of Young Adults in Australia: 2001 to 2019

“…The trends reflect, among other things, a weakening labour market, declining labour productivity and a decline in the bargaining power of workers (ILO, 2018). Slow wage growth is also a feature of the Australian labour market, particularly since the end of the mining investment boom in 2012 (Treasury, 2017; ILO, 2018; Andrews et al ., 2019; Kalb & Meeks, 2019). It is a particular feature of the youth and young adult labour markets.…”

“…At a macro level it has obvious implications for aggregate demand and economic growth (RBA, 2018). It also matters for hardship, financial well‐being and equity (Rubery, 1997; ILO, 2009; Kalb & Meekes, 2019). Slow, negative or zero wage growth for young people has particular policy implications, including policy related to university tuition fees and subsidies, student debt, retirement incomes, minimum wages and equity.…”

“…The rapid expansion in the higher education sector and the supply of graduates has generated particular interest in the returns to education. Recent Australian studies of this genre include Barrett (2012), Birch et al ., (2009), Borland and Coelli (2016), Coelli (2015), Coelli and Borland (2016), Coelli and Wilkins (2009), Carroll et al ., (2019), Corliss et al ., (2013, 2020), Daly and Lewis (2010), Kalb and Meekes (2019), Koshy et al ., (2016), Leigh and Ryan (2008), Lee (2014), Sinning (2017), and Wei (2010). Some have had a particular interest in understanding how the quality or rank of the tertiary institution attended affects education premiums (e.g.…”