Understanding Australian Income Inequality: The Proper Role played by Globalisation, De-unionisation and the Terms of Trade

This paper examines the key determinants of Australia’s income inequality. The main nding is that ‘globalisation ’ — broadly-dened — has increased income inequality. However, this impact is not attributable to increased trade openness and falling trade barriers. Income inequality and the presumed role of globalisation While the recent increases in income inequality are well-documented, considerable controversy still exists over which factors have been the most important causes of this trend.2 However, one of the essential claims in the popular writing on globalisation is its supposed impact on inequality. The role played by globalisation on labour market outcomes and income inequality in developed countries has been a particularly fertile ground for research during a time when international trade liberalisation has progressed and concerns about imports from low-skill-abundant, less-developed countries (LDCs) have been prominent.3 At the outset, it should be noted that increased earnings dispersion in the developed economies does not appear to have been primarily the result of shifts in employment from manufacturing to services. Even for the countries that witnessed the greatest increases in earnings dispersion, the increased-earnings dispersion phenomenon has been observed within narrowly-dened industrie