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An Employment Equation for Australia

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  • ROBERT DIXON
  • JOHN FREEBAIRN
  • G.C. LIM

Abstract

Changes in standard hours of work, as occurred in the 1970s and 1980s, alter the budget constraint facing employers and their employment decisions. Using quarterly data for the period 1969:1–2004:1, an employment equation for Australia that includes standard hours as well as the usual output, real wage and trend explanatory variables is estimated. Standard hours are found to be a significant explanatory variable, and omission of the variable results in biased estimates of the parameters on the other variables, especially on the real wage. When we allow for asymmetric adjustment, employment decisions are found to respond more quickly to changes in economic conditions in recessions than in other phases of the business cycle.

Suggested Citation

  • Robert Dixon & John Freebairn & G.C. Lim, 2005. "An Employment Equation for Australia," The Economic Record, The Economic Society of Australia, vol. 81(254), pages 204-214, September.
    • Handle: RePEc:bla:ecorec:v:81:y:2005:i:254:p:204-214
    DOI: 10.1111/j.1475-4932.2005.00256.x
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    References listed on IDEAS

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    1. Mardi Dungey & John Pitchford, 1998. "Prospects for Output and Employment Growth with Steady Inflation," RBA Annual Conference Volume (Discontinued), in: Guy Debelle & Jeff Borland (ed.),Unemployment and the Australian Labour Market, Reserve Bank of Australia.
    2. 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.
    3. Gregory, Allan W. & Hansen, Bruce E., 1996. "Residual-based tests for cointegration in models with regime shifts," Journal of Econometrics, Elsevier, vol. 70(1), pages 99-126, January.
    4. 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.
    5. Gregory, Allan W & Hansen, Bruce E, 1996. "Tests for Cointegration in Models with Regime and Trend Shifts," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 58(3), pages 555-560, August.
    6. Guy Debelle & James Vickery, 1998. "The Macroeconomics of Australian Unemployment," RBA Annual Conference Volume (Discontinued), in: Guy Debelle & Jeff Borland (ed.),Unemployment and the Australian Labour Market, Reserve Bank of Australia.
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    Cited by:

    1. Peter B. Dixon, 2009. "Comments on the Productivity Commission’s Modelling of the Economy‐Wide Effects of Future Automotive Assistance," Economic Papers, The Economic Society of Australia, vol. 28(1), pages 11-18, March.
    2. 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.
    3. Françoise Delmez & Vincent Vandenberghe, 2017. "Working long hours: less productive but less costly? Firm-level evidence from Belgium," LIDAM Discussion Papers IRES 2017022, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
    4. David Shepherd & Robert Dixon, 2008. "The Cyclical Dynamics and Volatility of Australian Output and Employment," The Economic Record, The Economic Society of Australia, vol. 84(264), pages 34-49, March.
    5. Athanasios Tagkalakis, 2014. "Discretionary fiscal policy and economic activity in Greece," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 41(4), pages 687-712, November.
    6. Jared Bullen & Jacinta Greenwell & Michael Kouparitsas & David Muller & John O’Leary & Rhett Wilcox, 2014. "Treasury's medium-term economic projection methodology," Treasury Working Papers 2014-02, The Treasury, Australian Government, revised May 2014.
    7. Robert Dixon & John Freebairn, 2007. "Hours of Work: A Demand Perspective," Department of Economics - Working Papers Series 1022, The University of Melbourne.
    8. Luis N. Lanteri, 2013. "Determinantes económicos del nivel de empleo. Alguna evidencia para Argentina," Ensayos Revista de Economia, Universidad Autonoma de Nuevo Leon, Facultad de Economia, vol. 0(1), pages 73-100, May.

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