Distribution of the Economic Gains of the 1990s

Abstract

Australia's surge in productivity growth in the 1990s fuelled an acceleration in growth in total income and average income (income per person in Australia). Annual average income growth accelerated from 1.4 per cent in the 1970s and 1980s to 2.5 per cent in the 1990s. Faster productivity growth accounted for over 90 per cent of the acceleration. The income growth of the 1990s was distributed evenly between labour (wages and salaries) and capital (profits). The labour and capital shares in economywide income were stable throughout the 1990s. Concerns that productivity-enhancing factors have adversely affected the income-earning potential of labour appear to be unfounded at the aggregate level.