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repec.nep.his

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compared with the United States and with the predictions of some Kuznets Curve. But

what about income gaps between Australian colonies?

Wage and earnings gaps between colonies might inform us about regional

income per capita gaps, perhaps one important source of national inequality, and

changes in those gaps might have influenced aggregate Australian inequality trends.

Robert Barro and others (Barro and Sala-i-Matin 1991; 1992; Mitchener and McLean

1999) have shown how poor regions converge on rich ones during mature stages of

modern economic growth. Following that lead, Paul Cashin (1995) documented the

same for Australia from 1861 to 1991. The poor colonies in 1861 were the three

recently settled, still agrarian, and poor new entrants – South Australia, Western

Australia, and Queensland – plus the older Tasmania, and the rich ones were New

South Wales and Victoria. While Barro identifies unconditional convergence in the

US from 1870 onwards and while Cashin shows the same for Australia from 1861

onwards, they both fail to deal with the decades prior to Cashin’s 1861 and Barro’s

1870 starting points. Did either Australia or the United States undergo a regional

Kuznets Curve (Williamson 1965) and, if so, did Cashin, Barro and others ignore the

upswing of that curve? How was it that the poor colonies in Australia and the poor

states in the US South got relatively poor? Did the rich regions just grow faster –

driven either by resource booms or by growing urban-industrial agglomerations – or

did the poor regions somehow fail?

In the American case, it was both. By 1860, and before the economically

devastating Civil War, average household income in the South Atlantic was only

about 67 percent of the industrial Northeast, while its wage rates were only 62 percent

of the Northeast (Lindert and Williamson 2016a: Table 5-7, p. 116 and Table 5-10, p.

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