Structural change and income distribution: the case of Australian telecommunications

The Australian telecommunications sector experienced substantial structural change during the 1990s, change that increased productivity and reduced costs. At this time, telecommunications was already an important item of household expenditure and input to production. We estimate the effect of the structural change on households depending on their location in the distribution of income and expenditure. Our estimates are calculated by applying a computable general equilibrium model incorporating microsimulation behaviour with top-down and bottom-up links. We estimate significant increases in real income and small increases in inequality from the changes; the pattern of effects is largely uniform across regions. Sensitivity analysis indicates that our results are insensitive to variations in model parameters.