The widespread heterogeneity in firms and households is crucial for understanding the propagation of macroeconomic shocks as well as the secular rise in inequality and the wage and productivity slowdowns. This program will aim to better understand micro-heterogeneity in an Australian context, using cutting-edge datasets on firms and households, as well as state-of-the-art econometric methods, with a view to building stronger micro-foundations for the Australian growth narrative.

This program focuses on:

• Generating key stylised facts on firm-level and worker-level heterogeneity in the Australian economy;
• Exploring the micro-drivers of Australia’s pre-pandemic productivity slowdown, with a focus on the role of technology, resource reallocation and net entry;
• Understanding the role of firm and worker level heterogeneity in the propagation of the COVID-19 shock onto the macroeconomy and the post-pandemic recovery;
• Studying the links between the heterogeneity in household finances and the sensitivity of the aggregate economy to various shocks.