Wage Inequality and Underemployment: Australia in the 1990S

Abstract

What is the connection between wage inequality and underemployment? This article explores the question in two ways. First it presents a theoretical account based on Marx’s notion of the reserve army of labour, as developed in the work of Botwinick. Second, it presents the findings of a distributional analysis of the 1990 and 1997 Income Distribution Surveys. These findings show that wage inequality increased markedly between 1990 and 1997, particularly for men. Importantly, the bottom deciles experienced not only declining hourly earnings, but also declining access to hours of work. The result was a considerable decline in weekly earnings. The article concludes that Botwinick’s thesis concerning the reserve army of labour provides a promising avenue for deepening the analysis of wage inequality in the contemporary Australian labour market.