Hostname: page-component-745bb68f8f-lrblm Total loading time: 0 Render date: 2025-01-13T00:15:21.871Z Has data issue: false hasContentIssue false
  • English
  • Français

Labour Market Flexibility and the Output-Employment Ratio in Australia

Published online by Cambridge University Press:  01 January 2023

A. Stegman  and
T. Stegman
A. Stegman
Affiliation:
School of Economics, University of New South Wales
T. Stegman
Affiliation:
School of Economics, University of New South Wales
Get access Rights & Permissions [Opens in a new window]

Abstract

This paper addresses two questions with regard to Australia’s unemployment policies over the last decade: namely, the extent to which labour market reform has led to increased labour market flexibility; and the extent to which increased output per worker has meant that strong GDP growth has been translated into correspondingly large reductions in unemployment. With regard to the first question, we use shifts in the Beveridge Curve as a measure of changes in flexibility (following Solow). Shifts in the Beveridge Curve suggest that changes in the efficiency of labour market matching reflect the cyclical effects of hysteresis rather than the effects of labour market reform. With regard to the second question, we decompose changes in the output-employment ratio into structural effects, average hours effects, and residual factor intensity effects. We identify those sectors of the economy in which output per worker has increased significantly.

Type
Research Article
Information
The Economic and Labour Relations Review , Volume 12 , Issue 2 , December 2001 , pp. 285 - 302
Copyright
Copyright © The Author(s) 2001

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

Footnotes

*

We acknowledge the helpful comments of John Nevile and an anonymous referee.

References

Abraham, K., Katz, L. (1986), ‘Cyclical Unemployment: Sectoral Shifts or Aggregate Disturbances?’, Journal of Political Economy, Vol 94, No 3, pp 507–522.CrossRefGoogle Scholar
Blanchard, O. and Summers, L. (1986), ‘Hysteresis and the European Unemployment Problem’ in Fisher, S (Ed) NBER Macroeconomics Annual, MIT Press, Cambridge Massachusetts.Google Scholar
Borland, J. (1997), ‘Unemployment in Australia’, The Australian Economic Review, December.Google Scholar
Borsch-Supan, A. (1991), ‘Panel Data Analysis of the Beveridge Curve: Is There a Macroeconomic Relation between the Rate of Unemployment and the Vacancy Rate?’, Economica, 58, pp 279–297.CrossRefGoogle Scholar
Brooks, C., Volker, P. (1984), ‘The Probability of Leaving Unemployment: The Evidence From Australian Gross Flows Data’, Bureau of Labour Market Research Conference Paper, No 47.Google Scholar
Burgess, J., Mitchell, W. and Watts, M. (1999) ‘The Labour Market since Howard’ in Kriesler, P. (Ed) The Australian Economy (3rd ed) Allen & Unwin.Google Scholar
Campbell, I., Brosnan, P. (1999) ‘Labour Market Deregulation in Australia: The Slow Combustion Approach to Workplace Change’, International Review of Applied Economics, 13, 2, pp 353–394.CrossRefGoogle Scholar
Campbell, I., Webber, M. (1996) ‘Retrenchment and Labour Market Flows in Australia’ Economic and Labour Relations Review, Vol 7, No 1, pp 88–119.CrossRefGoogle Scholar
Debelle, G. and Vickery, J. (1998) ‘The Macroeconomics of Australian Unemployment’ in Debelle, G. and Borland, J. (Eds) Unemployment and the Australian Labour Market, Reserve Bank of Australia, Sydney, Vol 31, No 5, pp 641–652.Google Scholar
Doeringer, P., Piore, M. (1975) ‘Unemployment and the Dual labour Market’ The Public Interest Vol 38, pp 66–75.Google Scholar
Foster, W. and Gregory, R. (1983) ‘A Flow Analysis of the Labour Market in Australia’ in Blandy, R. and Covick, O. (Eds), Understanding Labour Markets, Allen & Unwin.Google Scholar
Franz, W. (1990), ‘Hysteresis in Economic Relationships: An Overview’, EMPEC, 15, pp 109–125.Google Scholar
Jackman, R., Layard, R., Pissarides, C. (1989), ‘On Vacancies’, Oxford Bulletin of Economics and Statistics, Vol 51, No 4, pp 377–394.CrossRefGoogle Scholar
Layard, R., Nickell, S., Jackman, R. (1991), Unemployment: Macroeconomic Performance and the Labour Market, Oxford University Press, New York.Google Scholar
Lillien, D. (1982), ‘Sectoral Shifts and Cyclical Unemployment’, Journal of Political Economy, Vol 90, No 4.CrossRefGoogle Scholar
Lipsey, R. (1960), ‘The Relation Between Unemployment and the Rate of Change of Money Wage Rates in the United Kingdom, 1862–1957, A Further Analysis’, Economica, Vol 27, No 105, pp 1–31.CrossRefGoogle Scholar
Malinvaud, E. (2000) ‘Comment’ OECD (2000) Policies Towards Full Employment OECD Paris.Google Scholar
Nickel, S. (1997), ‘Unemployment and Labour Market Rigidities’ Journal of Economic Perspectives Vol 11, No 3.Google Scholar
OECD (1986), Labour Market Flexibility OECD Paris.Google Scholar
Productivity Commission (1997), Assessing Australia’s Productivity Performance AGPS.Google Scholar
Productivity Commission (1999), The New Economy? A New Look at Australia’s Productivity Performance AGPS.Google Scholar
Solow, R. (1997), ‘What is Labour-Market Flexibility? What is it Good For?’, Keynes Lecture, British Academy, Lonon, December.Google Scholar
Stegman, T. (1991), ‘Wages Policy and the 1991 Wage Case’ Economic and Labour Relations Review, Vol 2, No 1, June.CrossRefGoogle Scholar
Stegman, T. (1997), ‘Implications for Wages Policy in Australia of the Living Wage Case’ Economic and Labour Relations Review, Vol 8, No 1, June.CrossRefGoogle Scholar
Stegman, A., Stegman, T. (1999) ‘Labour Market Flexibility, the Beveridge curve, and the Output-Employment Ratio in Australia’ UNSW School of Economics Discussion Paper 99/16 University of New South Wales.Google Scholar
Trivedi, P., Hui, W. (1987), ‘An Empirical Study of Long-Term Unemployment in Australia’, Journal of Labour Economics, Vol 5, No 1, pp 20–42.CrossRefGoogle Scholar