Title: Recent Trends in Wage Income Inequality in Australia
1Recent Trends in Wage Income Inequality in
Australia
- Peter Saunders
- Social Policy Research CentreUniversity of New
South Wales - p.saunders_at_unsw.edu.au
- Presented to the Australian Social Policy
Conference, University of New South Wales, 20-22
July 2005
2Recent Studies of Earnings/Wage Income Inequality
- Using Earnings Data from Labour Force Surveys
- Gregory (1993) Keating (2003)
- Norris and McLean (1999) Saunders (2000)
- Using Household Income Survey Data
- Borland and Wilkins (1996) Borland and Kennedy
(1998) Borland (1999) - Richardson and Harding (1998 1999)
- Saunders (1996) Pappas (2001)
3Recent Findings
- Full-time earnings inequality has increased for
men and women, particularly between 1990 and
1994-95 - Inequality increase concentrated at the top for
males, but strong growth at the bottom for
females - Increased inequality has taken place within
education/experience groups, in a small number of
industries, among Australian-born and immigrants,
in private but not public sectors, with some age
differences
4Keating (2003) Study
- Relative pay rates by occupation have been stable
since the mid-1970s - Observed change in inequality reflects changes in
the occupational composition of employment - Need to address inequality through employment
policies, not by trying to control wage rate
changes
5Advantages of Using SIHC
- Can relate individual earnings to family
circumstances - Can locate earnings inequality in the overall
inequality profile - SIHC data are available in unit record file
format - BUT
- Switch from IDS to SIHC in 1995 is a potential
problem - Problems with some aspects of the reported SIHC
data (but not wages of full-time employees)
6Approach Used Here
- Focus on full-time employees aged 15-64 years
only - Period covered 1981-82 to 2000-01
- Examine changes in real (CPI-adjusted) total wage
incomes at different points (percentiles) in the
distribution - Explore changes at the very top of the
distribution - What does the disaggregated picture look like?
Have all FTEs experienced real wage income
increases? Are there systematic differences by
gender and age - Examine the distribution of employment growth
(since 1986)
7Ratio of Wages and Salaries (SIHC/IDS) and
Employee Income (HES) to Cash Wages and Salaries
in the Household Income Account (ASNA)
8Distribution of Wage and Salary Income Among
Full-time Employees by Gender, 1981-2001
(2000-01)
9Changes in Real Wage Incomes of All Full-Time
Employees (percentages)
10Changes in Real Wage Incomes of All Male
Full-Time Employees (percentages)
11Changes in Real Wage Incomes of All Female
Full-Time Employees (percentages)
12Main Findings
- Overall increase in inequality is substantial
- Inequality increased most between 1990 and
1994-95 steady increase for men since 1996-97 - Increase is mainly at the top for men, but more
evenly spread for women - P10 and P20 males have gone backwards, P10
females have done very well - Female earnings in 2000-01 lower than equivalent
male percentiles in 1981
13Changes in Real Wage Incomes of All Full-Time
Employees Under 25 (percentages)
14Changes in Real Wage Incomes of All Full-Time
Employees Aged 25-49 (percentages)
15Changes in Real Wage Incomes of All Full-Time
Employees Aged 50 (percentages)
16Main Findings
- Clear age differences in the change in
inequality - Little change in levels or inequality among
younger employees employment structure effects? - Older employees have done best in terms of
levels, but inequality has grown fastest - P10 P20 employees aged over 25 have gone
backwards
17Distributional Pattern of Changes in Male FTE,
1986- 2000-01
18Distributional Pattern of Changes in Female FTE,
1986- 2000-01
19In Conclusion
- The SIHC data provide a valuable source of
information on trends in wage income inequality - Findings are consistent with previous studies
- P90 and P95 employees have done very well, P10
employees (not females) have gone backwards - The aggregate picture is misleading not
everyone has gained from recent reforms - The disappearing middle thesis is still alive
and well particularly for males (but need more
research on this)