Lifetime Approach to Measuring Inequality in Living Standards in Australia

Funded by The Australian Research Council (Discovery Project)

Funding Amount: $219,000

Project start date: 2021

Researchers

• A/Prof Chung Tran (CI), ANU

Project Description

This project aims to develop a new methodology to study trends in inequality in Australia. It expects to advance the body of knowledge by measuring inequality in living standards over the whole lifetime and by identifying the role of the Australian fiscal system in redistributing lifetime resources across households and generations. This new approach would help clarify the potential bias embedded in commonly used inequality indicators based on current-year income. Its findings expect to provide new insights into how the gains from economic growth have been shared among Australians. It should also offer policy options for designing a better tax and transfer system that would sustain economic prosperity and fairness in Australia.

National Interest Statement

The tax and transfer (fiscal) system is one of core components of Australia’s national infrastructure and a policy tool to enable economic prosperity and social fairness as well as to protect national interests and the wellbeing of Australians in the face of negative events. This research will develop a new methodology to measure the growing inequality in Australia, using a lifetime approach. The new knowledge acquired by this research will provide a more accurate understanding of the evolution of the trend towards inequality and the role of fiscal policy and taxation in Australia. It will contribute to enhancing the efficiency and fairness of Australia’s tax and transfer system—the most critical national infrastructure. It will equip the Australian government with a better policy tool to effectively respond to rising dispersion in living standards due to changing national and global conditions. Overall, the research is expected to offer a more efficient and fairer design of the Australian tax system to sustain economic prosperity and social fairness for Australians in the twenty-first century.