This report examines the impacts of economic specialisation and diversification on Australia’s mid-sized towns. For the purposes of this project, mid-sized towns include all settlements with a population of 5,000 to 50,000 persons.

Mid-sized towns raise several questions of both local, and wider, policy significance - including questions around the wellbeing of their populations, the quality of life they offer residents, the satisfaction of their citizens and their resilience when confronted by economic and other shocks.

Key findings:

• specialisation has a positive effect on population and labour force size, but a negative effect on wages;
• specialisation can benefit local economies that are dependent on manufacturing, transportation and/or education;
• unrelated variety can help insulate local economies that are dependent on sectors especially prone to volatility, such as mining and manufacturing; and
• related variety can benefit local economies that are dependent on service-based industries, such as tourism and/or education, that derive their demand from other sectors of the economy.