DP13520 | Always Egalitarian? Australian Earnings Inequality c1870

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Trends in Australian inequality across the twentieth century are now well documented and they closely replicate trends in every other advanced economy: from WW1 to the 1970s, inequality fell steeply everywhere, and from the 1970s to the present, it rose just as steeply. Despite following a similar trajectory, Australia remained more egalitarian throughout. Why has it been exceptional and what are its origins? Previous work has found no evidence documenting any rise in Australian income and earnings inequality from 1820 to 1870. But what was the level of inequality around 1870? Was it more or less egalitarian than other New World countries and Europe then? Using an array of primary and secondary sources we construct social tables for Victoria and New South Wales (about 75 percent of Australia’s 1870 GDP) to estimate the Australian earnings distribution. We find that Australia was far more equal than in the United States, the United Kingdom and the rest of Europe during the same period. We speculate on the causes and whether the same estimates can be constructed for 1901 or 1911, thus documenting earnings distribution trends during Australia’s poor growth decades of the late nineteenth and early twentieth century.