Regional Economic Disparities in Australia

24 Pages Posted: 15 Feb 2006

See all articles by Uma Ramakrishnan

Uma Ramakrishnan

International Monetary Fund (IMF) - Policy Development and Review Department

Martin D. Cerisola

International Monetary Fund (IMF)

Date Written: August 2004

Abstract

Australia`s remarkable economic performance during the 1990s has not resulted in a significant convergence of real per capita income, output, and employment levels across the country`s states and territories. This paper explores the role of certain economic rigidities that may have contributed to the lack of convergence, including rigidities in labor markets and in the structure of federal government transfers to households and subnational governments. The analysis suggests that the wage awards system has restricted the adjustment of real wages to productivity differentials, thus contributing to higher unemployment rates in some states. Federal government transfers to households also appear to have adversely affected work incentives in high unemployment states by limiting participation in the labor force.

Keywords: Regional disparities, wage bargaining, government transfers

JEL Classification: H7, J5, R1

Suggested Citation

Ramakrishnan, Uma and Cerisola, Martin D., Regional Economic Disparities in Australia (August 2004). IMF Working Paper No. 04/144, Available at SSRN: https://ssrn.com/abstract=878969

Uma Ramakrishnan (Contact Author)

International Monetary Fund (IMF) - Policy Development and Review Department ( email )

700 19th St. NW
Washington, DC 20431
United States

Martin D. Cerisola

International Monetary Fund (IMF) ( email )

700 19th Street NW
Washington, DC 20431
United States

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