elsewhere, such as the US. Second, skill scarcity implies skill premiums and

incentives to invest more in those skills. On the other hand, the demand for skills

could have grown faster than supply, as it did in the US, hence augmenting inequality.

However, such arguments do not stand on very strong ground, as the Australian

economy did not undergo a dramatic industrial revolution – certainly not up to 1871.

Rather, a high demand for farm workers was the central force driving labor markets,

not a demand for urban-industrial skills.

Given the lack of systematic evidence on these dimensions of Australian

economic performance, we contribute to the literature in three ways: by providing a

quantitative measurement of living standards in in the 1820s and 1830s; by

documenting trends in earnings inequality from the 1820s to the 1870s; and by

utilizing such measures to relate Australia’s living standards, growth, and inequality

to those of other countries, hence offering a new perspective on extent to which the

Australian experience was exceptional.

By the word “exceptionalism” we mean a comparison with other New World

frontier societies, and, in particular, with the United States. Until now, the comparison

has been limited by the absence of empirical evidence. But now our quantitative

knowledge of young United States’ growth, living standards, and inequality is

extensive, covering the two centuries from colonial times in the late seventeenth

century to 1870 and the middle of its dramatic industrial revolution.

To be clear, this paper represents the first attempt to establish the Australian

facts about living standards and inequality trends between the 1820s and the 1870s.

This will allow us to answer questions about Australia’s experience in comparative

perspective: Where do we find exceptionalism, especially relative to the United

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