Wage inequality and neoliberalism: insights from quantile regression

Abstract

This paper examines wage inequality in Australia from 1982 to 2010 using income distribution data from the Australian Bureau of Statistics. The analysis shows that wage inequality grew steadily during this period, and that the growth was particularly strong from 1996 onward. Through the use of quantile regression it is possible to decompose the growth in inequality into three components: changes in the wage structure, changes in workforce characteristics, and a residual (`unobservables'). The results of this analysis are conclusive among male full-time employees: despite the conventional wisdom that the changing nature of the workforce contributed to the growth of inequality, I find that the changes in the wage structure were overwhelming responsible. The results among female full-time employees are similar, but not as conclusive. The paper locates these findings within an analysis of neoliberalism in Australia and suggests that deindustrialisation and financialisation appear to be closely related to increased inequality.