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Why Was Australia So Rich?

  • Ian W. McLean

    ()

    (School of Economics, University of Adelaide)

Between 1870 and 1890 Australian incomes per capita were 40 percent or more above those in the United States. About half this gap is attributable to Australia's higher labor input per capita, and half to its higher labor productivity. The higher labor input is due in part to favorable demographic attributes stemming especially from the gold rush era, and partly to a favorable workforce participation rate. The higher labor productivity appears to result from an advantageous natural resource endowment. By 1914 the income lead over the U.S. had all but disappeared. This is ascribed to declines in Australia's advantages both in labor input per capita and in labor productivity. It is argued that these declines are due neither to the effects of the 1890s depression, nor to changes in trade policy, but to the transitory or unsustainable nature of Australia's earlier sources of income advantage.

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File URL: http://www.economics.adelaide.edu.au/research/papers/doc/wp2005-11.pdf
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Paper provided by University of Adelaide, School of Economics in its series School of Economics Working Papers with number 2005-11.

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Length: 40 pages
Date of creation: Aug 2005
Date of revision:
Handle: RePEc:adl:wpaper:2005-11
Contact details of provider: Postal: Adelaide SA 5005
Phone: (618) 8303 5540
Web page: http://www.economics.adelaide.edu.au/

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