Regional Economic Disparities in Australia
International Monetary Fund, Aug 1, 2004 - Business & Economics - 23 pages
Australia''s remarkable economic performance during the 1990s has not resulted in a significant convergence of real per capita income, output, and employment levels across the country''s states and territories. This paper explores the role of certain economic rigidities that may have contributed to the lack of convergence, including rigidities in labor markets and in the structure of federal government transfers to households and subnational governments. The analysis suggests that the wage awards system has restricted the adjustment of real wages to productivity differentials, thus contributing to higher unemployment rates in some states. Federal government transfers to households also appear to have adversely affected work incentives in high unemployment states by limiting participation in the labor force.
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45 W WW Adjusted R-squared Australian Average Australian Bureau Australian Capital Territory Average for Australia Bureau of Statistics capita disposable income capita GDP capita general purpose capita income coefficient deﬂated Dependent Variable Duration of Unemployment employees employment to population Employment/Population equalization principle Estimation excludes Australian estimation with ﬁxed excludes Australian Capital ﬁxed effects Garnaut and FitzGerald govemment government transfer variables gross state product growth in real H HH Household Disposable Income income and output inﬂuence INTERNATIONAL MONETARY FUND labor force participant Lawson and Dwyer ln real lower income Median Duration national average Northern Territory null hypothesis old age pension output and income output dispersion output growth P-values productivity differentials purpose payments Queensland Ratio of Real real per capita real wages reﬂect regional disparities regression relative revenue South Australia South Wales state’s Tasmania transfers per household Transfers per labor transfers to households Victoria wage awards system Western Australia