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Modelling Aggregate Demand for Labour: A Reply to Dowrick and Wells

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  • PHILIP E.T. LEWIS
  • GARRY MACDONALD

Abstract

Dowrick and Wells (2004) have attempted to point to what they see as a number of fundamental misinterpretations in a recent paper by Lewis and MacDonald (2002) estimating demand for labour in Australia. However, it is argued here that it is a particular assumption about a nominal price setting that leads to their results being different from that of the standard literature on labour demand. When the usual assumption are adopted, the results of Lewis and MacDonald (2002) hold and, therefore, are correct.

Suggested Citation

  • Philip E.T. Lewis & Garry Macdonald, 2004. "Modelling Aggregate Demand for Labour: A Reply to Dowrick and Wells," The Economic Record, The Economic Society of Australia, vol. 80(251), pages 441-444, December.
    • Handle: RePEc:bla:ecorec:v:80:y:2004:i:251:p:441-444
    DOI: 10.1111/j.1475-4932.2004.00201.x
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    References listed on IDEAS

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    1. repec:bla:ecorec:v:67:y:1991:i:196:p:34-45 is not listed on IDEAS
    2. Lewis, Philip E. T. & Kirby, Michael G., 1988. "A new approach to modelling the effects of incomes policies," Economics Letters, Elsevier, vol. 28(1), pages 81-85.
    3. Philip E. T. Lewis & Garry MacDonald, 2002. "The Elasticity of Demand for Labour in Australia," The Economic Record, The Economic Society of Australia, vol. 78(240), pages 18-30, March.
    4. Bill Russell & Warren Tease, 1991. "Employment, Output and Real Wages," The Economic Record, The Economic Society of Australia, vol. 67(1), pages 34-45, March.
    5. Steve Dowrick & Graeme Wells, 2004. "Modelling Aggregate Demand for Labour: A Critique of Lewis and MacDonald," The Economic Record, The Economic Society of Australia, vol. 80(251), pages 436-440, December.
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    Cited by:

    1. Marika Karanassou & Hector Sala, 2010. "Labour Market Dynamics in Australia: What Drives Unemployment?," The Economic Record, The Economic Society of Australia, vol. 86(273), pages 185-209, June.
    2. Jesus Felipe & John S.L. McCombie, 2013. "The Aggregate Production Function and the Measurement of Technical Change," Books, Edward Elgar Publishing, number 1975.

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