IDEAS home Printed from https://ideas.repec.org/p/rba/rbaacp/acp2019-08.html
   My bibliography  Save this paper

Wage Growth in Australia: Lessons from Longitudinal Microdata

Author

Listed:
  • Dan Andrews
  • Nathan Deutscher
  • Jonathan Hambur
  • David Hansell

Abstract

This paper uses novel microdata sources spanning 2001-02 to 2015-16 to explore the structural drivers of wage growth in Australia, with a view to better understanding recent weak wage growth – a phenomenon observed across a range of advanced economies. Controlling for a range of cyclical and other factors, we show that part of firms' idiosyncratic productivity growth tends to be passed-through to workers in the form of higher wage growth, consistent with the idea that firms share rents with their workers. The size of this pass-through is around the midpoint of leading international estimates, and appears to decline modestly after 2012-13, when aggregate wage growth begins to slow. We then discuss a range of possible mechanisms for this modest decline, including the transition from the mining boom, globalisation, changing shock processes, declining labour market fluidity and uneven technology diffusion. Given that our dataset does not cover the past few years, however, it is not clear whether lower pass-through of productivity to wages has persisted. In this respect, our results represent a tentative first step in examining the microeconomic drivers of a macroeconomic phenomenon with particular reference to wages. We provide a proof-of-principle demonstration of the value of longitudinal microdata and empirical techniques to such investigations, and suggest further analysis into the factors behind declining labour market fluidity would be a fruitful exercise.

Suggested Citation

  • Dan Andrews & Nathan Deutscher & Jonathan Hambur & David Hansell, 2019. "Wage Growth in Australia: Lessons from Longitudinal Microdata," RBA Annual Conference Papers acp2019-08, Reserve Bank of Australia, revised Jul 2019.
    • Handle: RePEc:rba:rbaacp:acp2019-08
    Note: Paper presented at the RBA's annual conference 'Low Wage Growth', Sydney, 4–5 April 2019.
    as

    Download full text from publisher

    File URL: https://www.rba.gov.au/publications/confs/2019/pdf/rba-conference-2019-andrews-deutscher-hambur-hansell.pdf
    Download Restriction: no
    ---><---

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Guyonne Kalb & Jordy Meekes, 2021. "Wage Growth Distribution and Changes over Time: 2001–2018," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 54(1), pages 76-93, March.
    2. Tomas Kennedy & Peter Siminski, 2022. "Are We Richer than Our Parents Were? Absolute Income Mobility in Australia," The Economic Record, The Economic Society of Australia, vol. 98(320), pages 22-41, March.
    3. Allan, Corey & Maré, David C., 2021. "Do Workers Share in Firm Success? Pass-through Estimates for New Zealand," IZA Discussion Papers 14764, Institute of Labor Economics (IZA).
    4. Dan Andrews & David Hansell, 2021. "Productivity‐Enhancing Labour Reallocation in Australia†," The Economic Record, The Economic Society of Australia, vol. 97(317), pages 157-169, June.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:rba:rbaacp:acp2019-08. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Paula Drew (email available below). General contact details of provider: https://edirc.repec.org/data/rbagvau.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.