Dimensions of Earnings Inequality in the Labour Market: the Australian Experience

Over the last three decades, Australia and other industrialised nations experienced major social and economic change. In Australia, two of these major developments have been increasing inequality of earnings and the growth in alternative forms of employment arrangements. In the case of the US and a number of other countries, the prevailing explanation for the increase in inequality centres on the notion of skill-biased technological change (SBTC). This explanation relates the increases in earnings inequalities to a shift in demand towards highly skilled workers and away from less skilled workers, and centres around the concept and measure of skill. In many countries, the distribution of earnings has become increasingly unequal, implying that a new era of workplace unrest might emerge. This study provides a new analytical approach to define, measure and analyse the changing nature of workplace skills, and the role of higher payments for increased skill levels. The work has significant policy implications, and has made an important contribution to the study on this issue in labour economics.