Wage Growth Distribution and Decline among Individuals: 2001-2017

We examine how wage growth is distributed across the Australian population over the period 2001 to 2017. We explore to what extent wage growth is explained by individual characteristics and job characteristics, while controlling for changes in aggregate factors. We also examine the link between low wage growth and financial well-being. The results show that post 2008, and particularly from 2013 onwards, wage growth had significantly slowed down. This result remains, even after controlling for a broad range of individual, household and job characteristics (and for time-invariant unobserved characteristics). Our results also show that the employee’s age, education, occupation and industry explain a large share of differences in wage growth. Conversely, the employee’s gender and employment contract seem less important. Overall, about half of the wage growth is explained by individual and job characteristics. Finally, we show that wage growth has a significant positive, but small, correlation with financial well-being indicators