Professor Steve Dowrick
Australian National University
Steve Dowrick was appointed Professor of Economics in the Faculty of Economics and Commerce at the Australian National University in 1996. He currently holds an Australian Research Council Senior Fellowship and is a Fellow of the Australian Academy of Social Sciences. He has published extensively in leading international journals such as the ‘American Economic Review’ and the ‘Economic Journal’. Following his PhD from the University of Warwick in the UK, he published a number of papers on the economics of union-employer bargaining, exploring the interaction between product and labour markets. More recently his research has focused on economic growth, examining the factors that promote convergence as well as the factors that explain the failure of global convergence. An offshoot of this research on growth has led to the development, with John Quiggin, of a new multilateral welfare index (the true Afriat index) which avoids the twin problems of exchange rate bias and substitution bias in international comparisons of income and broader social indicators. He is currently investigating the implications of this approach for the debate on global income inequality.
Levels of fertility below the replacement rate imply that the populations of most OECD countries are ageing, the ratio of the elderly to the working-age population is expected to increase dramatically and the burden of taxation on the next generation is predicted to rise. Policy responses have been centred on the three Ps: population, participation and productivity. Here we argue that as a matter of simple arithmetic the key factor is productivity. With moderately strong productivity growth, the living standards of the next generation can be expected to greatly exceed those of the current working-age generation – even if the tax burden rises. Moreover, a substantial part of the increase in living standards is due to the massive investment made by the current parental generation in the education of the next generation. Rising levels of education are both the cause and the solution to the problem of an ageing population.