Since the introduction of the National Disability Insurance Scheme (NDIS), the care economy in Australia has expanded sharply. Given the labour-intensive nature of care, growing the formal care sector has required a large number of workers. This paper documents three channels through which this large labour demand shock and structural change has affected the labour market over the past decade.

Fair Work Commission decisions have also delivered strong wage growth in a predominantly female sector. Together with the introduction of the NDIS, this has narrowed gender gaps in both employment and pay, especially benefiting younger women. This has transformed the labour market, including:

• Improved employment prospects for women under 35: rising labour demand in the care sector has been met disproportionately by young women, for whom it has become the most common destination from non-employment.
• A narrowing of the hourly gender pay gap: down by around 3.5 percentage points over the past decade, from 11.5% to 8%.
• Women now out-earn men per hour, on average, from age 15 to their early 30s. Despite wage gains, care jobs still lag most other jobs on flexibility, pay, opportunities for progression and overall job satisfaction.
• Increased job security: care jobs offer job stability due to government backing and ongoing sector growth.