This article reviews research on recent developments in earnings inequality in Australia. Four main issues are addressed. First, what are the main changes in earnings inequality which have occurred? Second, what do we know about the causes of changes in earnings inequality? Third, how have earnings differentials between workers in different skills groups changed, and to what extent can those changes be explained by shifts in the relative demand for labour and relative supply of labour by level of skill? Fourth, how have changes in earnings inequality affected the distribution of income?