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Regional Economic Disparities in Australia

Author

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  • Ms. Uma Ramakrishnan
  • Mr. Martin D. Cerisola

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.

Suggested Citation

  • Ms. Uma Ramakrishnan & Mr. Martin D. Cerisola, 2004. "Regional Economic Disparities in Australia," IMF Working Papers 2004/144, International Monetary Fund.
    • Handle: RePEc:imf:imfwpa:2004/144
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    References listed on IDEAS

    as
    1. Mr. Phillip L Swagel & Mr. Steven V Dunaway & Mr. Martin D Kaufman, 2003. "Regional Convergence and the Role of Federal Transfers in Canada," IMF Working Papers 2003/097, International Monetary Fund.
    2. Unknown, 1999. "Impact of Competition Policy Reforms on Rural and Regional Australia," Inquiry Reports 31892, Productivity Commission.
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    Cited by:

    1. Capella-Ramos, João & Checherita-Westphal, Cristina & Leiner-Killinger, Nadine, 2020. "Fiscal transfers and economic convergence," Occasional Paper Series 252, European Central Bank.

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