Individual earnings mobility and the persistence of earnings inequalities in Australia

This paper assesses earnings mobility among workers in Australia between 2001/2 and 2008/9 using HILDA household panel data. We examine the pattern of individuals’ earnings growth and explore the importance of mobility as an equaliser of longer-term earnings. We find that progressive earnings growth decreased overall inequality even after considering the re-ranking that occurred in the distribution. This was partly driven by growth of earnings with age and partly by step changes associated with job-to-job moves, promotions and taking on more responsibility. Shocks also acted against this equalising process, most notably job loss, which had substantial negative effects on earnings and disproportionately fell on lowerwaged workers.