Nabeeh Zakariyya, ANU - Uneven Growth, Redistribution and Inequality: The Australian Case

Title: Uneven Growth, Redistribution and Inequality: The Australian Case

Abstract: We examine how tax and transfers could moderate the distributional impacts of uneven economic growth. With three decades of uninterrupted economic growth from 1991-2020, and a highly progressive tax and transfer system throughout, Australia provides an ideal case study. Using longitudinal income tax records of millions of taxpayers, we track income growth over time, across the market income distribution, and lifetime income of over 10 cohorts. Results show uneven sharing of gains, favoring higher income groups. Progressive taxes and transfers played a crucial role in balancing these disparities. While inter-cohort income inequality increased over time, lifetime inequality within cohorts remained lower, revealing biases in cross-sectional analyses. Using a dynamic general equilibrium lifecycle model, we highlight trade-offs between aggregate efficiency and income inequality that arise from more progressive and generous tax-transfer systems.

Presenter: Nabeeh Zakariyya, Australian National University

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