The aim of this thesis is to analyse labour market outcomes under the Prices and Incomes Accord. It will specifically concentrate on the evolution of the Accord with respect to nominal wage growth by occupation/skill group, the effect on domestic labour markets of increased trade, skill-biased technology change, the ability of wages to vary with labour revenue product, time lags involved in wage adjustment, and disequilibrium in the wage setting procedures.
The first result of the empirics is the identification of a structural break in the wage disparity data around the implementation of the Accord mark II. Using coiutegration and error-correction econometrics, both trade and technological factors (post-structural break) are found to possess high explanatory power in wage disparity growth over the Accord period. Also significant were immigration rates, increased female participation in the workforce, and declining trade union membership. A non-nested test finds that the technology equation encompasses the explanatory power of the trade model, and is thus the better explanation. The interpretation of the trade and technology model parameters find significant evidence for a wage setting segmentation process in the Australian labour market under the Accord: firms most exposed to international influences (i.e. those in import and export markets) having wages set predominantly at the enterprise level, and the residual industries having wages determined by centralised award agreements. The models also suggested that wages at both the award and enterprise level were subject to disequilibrium errors. Additionally, evidence of unemployment hysteresis was found in the respective models.