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The Macroeconomic Consequences of Long‐Term Unemployment

Author

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  • Paul Flatau
  • Philip E. T. Lewis
  • Allison Rushton

Abstract

This article examines the linkages between long‐term unemployment and two important recent debates in Australia: first, whether unemployment exhibits hysteresis tendencies; second, the nature of the relationship between unemployment and real wages. Our findings favour the hysteresis account in that the evidence rejects an equilibrium relationship between long‐term and total unemployment. Also, the effect on real wages of an increase in the number of longterm unemployed is found to be both positive and significant.

Suggested Citation

  • Paul Flatau & Philip E. T. Lewis & Allison Rushton, 1991. "The Macroeconomic Consequences of Long‐Term Unemployment," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 24(4), pages 48-56, October.
    • Handle: RePEc:bla:ausecr:v:24:y:1991:i:4:p:48-56
    DOI: 10.1111/j.1467-8462.1991.tb00402.x
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    References listed on IDEAS

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    1. Chapman, B.J. & Gruen, F., 1990. "An Analysis Of The Australian Consensual Incomes Policy: The Prices And Incomes Accord," CEPR Discussion Papers 221, Centre for Economic Policy Research, Research School of Economics, Australian National University.
    2. Groenewold, N. & Taylor, L., 1990. "Insider Power As Source Of Hysteresis In Unemployment: Tests With Australian Data," Papers 1990-08, Tasmania - Department of Economics.
    3. repec:ilo:ilowps:275456 is not listed on IDEAS
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    Cited by:

    1. Dobbie, Michael, 2006. "Insider Power, Outsider Ineffectiveness and Product Market Competition: Evidence from Australia," Review of Applied Economics, Lincoln University, Department of Financial and Business Systems, vol. 2(1), pages 1-19.
    2. Jeff Borland, 2000. "Disaggregated Models of Unemployment in Australia," Melbourne Institute Working Paper Series wp2000n16, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne.

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