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Microeconomic reforms and the revival in Australia’s growth in productivity and living standards

Conference paper

This paper by Dean Parham was presented to the 31st Annual Conference of Economists in Adelaide on 1 October. The paper was presented in a session on Microeconomic Reform Revisited.

Microeconomic reforms were introduced from the mid-1980s to stem the slippage in growth in Australia’s productivity and living standards. Productivity growth more than doubled in the 1990s to reach a record high.

A range of possible explanations for the productivity surge are examined in the paper. The three most plausible are microeconomic reforms; education and skills in the workforce; and the rapid uptake and smart use of information and communications technologies.

To a certain extent, these three factors have interacted. The surge in productivity growth has underpinned growth in average incomes that is strong by both historical and international standards.

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Contents

1   Introduction

2   The motivation for policy reform
Why did Australia perform poorly?
The growing imperative for reform

3   The productivity surge in the 1990s
The robustness of the evidence
An industry perspective

4   The influence of policy reforms and other factors
Some explanations without punch
ICTs and productivity growth
Education and skills
Policy reforms

5   Trends in living standards

6   Concluding remarks

References

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