The resources boom has prompted much discussion of Australia having become a two-speed economy. There are concerns that the gains from the boom accrue largely to mining-related sectors and the states where these are concentrated, while the rest of the country is being hit by higher interest and exchange rates as a result of the boom.
This article shows that there has been a divergence in output and employment growth between the mining states and the rest of the country in recent years. Less well recognised is that this is not a new phenomenon. Although recent growth differences have been larger than average, the mining states have generally grown faster than the rest for some time, mainly reflecting faster population growth.
Nor does the evidence support the contention that the non-mining states have largely missed out on the benefits of the boom. Recent growth in employment and real household disposable incomes in these states has been well above average. This suggests that income gains from the boom have been more widely distributed and that it has provided a stimulus to labour demand generally.