Benefitting from globalisation and technological change in Australia

By Urban Sila and Philip Hemmings. OECD Economics Department Working Paper No. 1537.

Australia has seen large rises in living standards over the last decades across the whole of the income distribution. Technological change and international trade have contributed to this success, but have also brought structural change. Some industries have declined, while others flourished. Furthermore, new technologies and structural change create new skills and new tasks, boosting demand for some jobs, while making others disappear. Although technology and globalisation have not decreased overall employment, certain people, groups, and communities have undergone disruptive change and experienced falling living standards. Some groups face a higher risk of poverty and laid-off workers can have difficulty finding a new job. Well-informed and well-targeted policy is therefore needed to ensure that the benefits of technology and globalisation are widely shared. This paper focuses on policies to ensure that everyone in Australia has the opportunity to benefit from technological change and globalisation. The paper assesses policies relating to three issues: i) labour markets and active labour market policies; ii) education and skills; to ensure adequate skills for accessing good quality jobs; and iii) urban environments, ensuring that Australia’s highly urbanised population can adapt to change.

 

Income, wealth and earnings inequality in Australia. Evidence from the HILDA survey

By Urban Sila and Valéry Dugain. OECD Economics Department Working Paper No. 1538.

This paper analyses income, wealth and earnings inequality in Australia, using the Household, Income and Labour Dynamics in Australia (HILDA) Survey as the primary source of data. Income inequality in Australia has risen in the last two decades, but most of the rise occurred prior to the global financial crisis. HILDA data nevertheless show evidence of slower income growth in the middle of the income distribution compared with the top and the bottom. While Australia has experienced a rising inequality in wages – mostly through rapid earnings increases among top earners – this has been offset by increased participation and longer hours worked at the bottom of the distribution. According to HILDA data, relative pay across different levels of education groups has not recorded large shifts over the last 15 years. At the same time, we find evidence for job polarisation; notably, the share of high skilled jobs versus middle skilled jobs has increased. With respect to concerns about the casualisation of the labour force and less stable nature of jobs amid technological change and globalisation, the incidence of casual employment – where workers receive no paid sick leave or holiday leave – in Australia has been reported to have risen since the 1980s, especially for females. According to HILDA data however, the incidence of casual employment has fallen since early 2000s. Furthermore, we find no evidence that contract duration has shortened over time.

 

Income poverty in Australia. Evidence from the HILDA survey

By Urban Sila and Valéry Dugain. OECD Economics Department Working Paper No. 1539.

This paper analyses relative income poverty in Australia of individuals aged 15 or more, based on the HILDA Survey data. Australia has above-average poverty rates among OECD countries, but poverty has decreased in the last 15 years. Certain groups are more at risk than others. People living alone and lone parents are at higher risk of poverty. Old people in Australia have a more than 30% chance of living in poverty, which is one of the highest in the OECD. Among those of working age, being employed significantly reduces the risk, while those out of the labour force and the unemployed are at much higher risk of poverty. Nevertheless, there is poverty also among people that work, typically casual workers and part-time workers. People with low education are also at risk. Those living alone and one-parent households face quite a high risk of poverty, even if they are employed. Indigenous Australians are almost twice as likely to be poor than the rest of Australians and they appear significantly poorer than the rest even after controlling for education, age, industry, skill and geographical remoteness, suggesting a range of socio-economic issues, including poor health and discrimination.

 

Job displacement in Australia. Evidence from the HILDA survey

By Urban Sila. OECD Economics Department Working Paper No. 1540.

Australia has a dynamic labour market with high job turnover. According to the HILDA Survey data, about one-fifth of all employees separate from their job every year, and about one fifth of those are displaced workers – laid off for economic reasons. Using multivariate probit regression we find that men, older workers and workers with less than secondary education tend to be displaced more often. In certain industries, such as construction and manufacturing, the incidence of displacement has been higher over the last fifteen years. Workers with lower tenure and casual employees also face a higher probability of displacement. However, a very high proportion – close to 80% percent – of displaced workers find a new job within two years. Among certain groups of workers, the share finding new employment is significantly lower: women, older workers, and less educated workers, workers who had a casual job and part-time workers. However, not all groups search for a job after being displaced. We find evidence that women, older workers and workers in low-skilled occupations are quite likely to exit the labour force following displacement.

(Source: OECD iLibrary)

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