the distribution of recent economic gains some early observations n.
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The Distribution of Recent Economic Gains: Some early observations. Ben Dolman. Some early observations. Sources of income growth The labour share of income Labour market outcomes. Sources of income growth. GDP per capita. Average annual growth in GDP per capita (per cent).

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Presentation Transcript
some early observations
Some early observations
  • Sources of income growth
  • The labour share of income
  • Labour market outcomes
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 output1
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.
labour income shares
Labour income shares

Per cent of total factor income

labour and capital
Labour and capital

Indexes, 1999-2000 = 100

slide14

Changes in labour income shares …

Share of total factor income, per cent

… within industries

slide15

Changes in labour income shares …

… within industries

Share of total factor income, per cent

… between industries

average return on capital
Average return on capital

Per cent per annum

average return on capital1
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)

summary1
Summary
  • Through the 1990s, the benefits of microeconomic reform were evenly shared with workers – throughhigher 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 outcomes1
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

Unemployment rate

Employment rate

Per cent of civilian population

Per cent of labour force

labour market outcomes2
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.