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This paper contains an analysis of the sources of income inequality in Australia, based on data from the ABS income survey for 1978‐79. The analysis proceeds by progressive decomposition of the population into component groups differentiated by characteristics such as sex, age, employment status and occupation. At each stage of the decomposition, total inequality is partitioned into contributions from within and between the component groups, as measured by the Shorrocks Iq index. The importance of the characteristic in question as a source of inequality can then be assessed. While the results of the analysis are described in some detail, the emphasis of the paper is primarily methodological.

This article contains an analysis of the effects of changes in the existing tax mix on the distribution of income in Australia. Shifts from direct to indirect taxes, similar to 'Option C' in the Government's Draft White Paper on tax reform, are considered. The general equilibrium effects of the policy changes are analysed using an extended version of the ORANI model of the Australian economy. The Shorrocks I 0 index is then used to identify the sources of inequality in the pre- and post-change distributions. The results are based on data from the ABS Income and Housing Survey for 1981-82. Copyright 1986 The University of Melbourne, Melbourne Institute of Applied Economic and Social Research.

Originally presented at the Fourth International Symposium on Forecasting, London, July 1984, this article reviews the role in policy analysis of the ORANI model of the Australian economy. A schematic description of the model is given. Conceptual issues concerning the use of such models for counterfactual policy analysis and for explicit forecasting are canvassed. A taxonomy is presented of policy applications of ORANI classifying both the policy issues addressed and the range of information obtained from the applications. Details of selected applications are discussed with the aim of illustrating the main themes which arise in policy studies conducted using the model. Copyright 1985 The University of Melbourne, Melbourne Institute of Applied Economic and Social Research.

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