From Golden Age to Golden Age: Australia's ‘Great Leap Forward’?*

The 25 years after World War II witnessed strong labour market institutions and beneficial labour market outcomes – high wage growth and integration of low‐skilled immigrants. Then came the macro shocks of the mid‐1970s. Labour market outcomes deteriorated as full‐time employment–population ratios fell, particularly among men; unemployment and welfare use increased; and real wages grew slowly. The golden age passed. In response, successive governments have increasingly begun to dismantle the institutional framework. We address this transition within a simple long‐run graphical framework to help us marshal facts and arguments and to discuss the likely impact of institutional reform.