DolmanDistributionOf RecentEconomicGains

The Distribution of Recent Economic Gains:Some early observations: 

The Distribution of Recent Economic Gains: Some early observations Ben Dolman

Some early observations: 

Some early observations Sources of income growth The labour share of income Labour market outcomes

Sources of income growth: 

Sources of income growth

GDP per capita: 

GDP per capita Average annual growth in GDP per capita (per cent)

Market sector output: 

Market sector output Contributions to average annual growth in market sector output (percentage points)

Industry contributions: 

Industry contributions Share of output Share of hours worked Per cent Per cent

Market sector output: 

Market sector output Contributions to average annual growth in market sector output (percentage points)

Summary: 

Summary Reforms to the supply side of the economy led to productivity growth in the 1990s. Since then, output growth has been input driven … Strong investment More workers (though lower average hours) … and price driven, through soaring terms of trade. These changes can be identified with changes in demand.

The labour share of income: 

The labour share of income

Labour income shares: 

Labour income shares Per cent of total factor income

Labour and capital: 

Labour and capital Indexes, 1999-2000 = 100

Labour and capital: 

Labour and capital

Labour and capital: 

Labour and capital

Slide14: 

Changes in labour income shares … … within industries Share of total factor income, per cent

Slide15: 

Changes in labour income shares … … within industries … between industries Share of total factor income, per cent

Average return on capital: 

Average return on capital Per cent per annum

Average return on capital: 

Average return on capital Nominal return less 10-year bond rate (Per cent per annum)

Some implications: 

Some implications Share price indexes Capital services Indexes, 1989-90 = 100

Gross national income: 

Gross national income Contributions to average annual growth in GNI per capita (percentage points)

Summary: 

Summary Through the 1990s, the benefits of microeconomic reform were evenly shared with workers – through higher wages and lower output prices – and firms. Since then the labour income share has fallen mainly because profit rates on capital have increased. The labour income share has fallen in most market sector industries. The largest contributors are mining (about ½ of the overall fall), construction and finance. These industries have experienced particularly strong demand-driven growth. Higher profit rates have also seen more earnings remitted offshore.

Labour market outcomes: 

Labour market outcomes

Labour market outcomes: 

Labour market outcomes A. Jobless families B. Jobs growth and the wage distribution C. Male full-time employment D. Unemployment and education

A. Jobless families: 

A. Jobless families Percentage of families with dependent children and no working head

B. Jobs growth by wage rate: 

B. Jobs growth by wage rate Annual average growth in hours worked (per cent)

C. Male full-time employment: 

C. Male full-time employment Full-time employment rate (per cent of civilian population) Age group

D. Education: 

D. Education Employment rate Unemployment rate Per cent of civilian population Per cent of labour force

Labour market outcomes: 

Labour market outcomes A. Jobless families B. Jobs growth and the wage distribution C. Male full-time employment D. Unemployment and education

Concluding observations: 

Concluding observations Australia’s economic growth this decade has been marked by strong demand growth, particularly in construction, mining and finance. These have brought much higher profits which in turn appear to have driven strong investment and employment growth. Labour market outcomes have improved in many ways.