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Labour Market Flexibility and the Output-Employment Ratio in Australia

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  • A. Stegman
  • T. Stegman

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.

Suggested Citation

  • A. Stegman & T. Stegman, 2001. "Labour Market Flexibility and the Output-Employment Ratio in Australia," The Economic and Labour Relations Review, , vol. 12(2), pages 285-302, December.
    • Handle: RePEc:sae:ecolab:v:12:y:2001:i:2:p:285-302
    DOI: 10.1177/103530460101200209
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    References listed on IDEAS

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    1. Layard, Richard & Nickell, Stephen & Jackman, Richard, 2005. "Unemployment: Macroeconomic Performance and the Labour Market," OUP Catalogue, Oxford University Press, number 9780199279173.
    2. Iain Campbell & Peter Brosnan, 1999. "Labour Market Deregulation in Australia: The slow combustion approach to workplace change," International Review of Applied Economics, Taylor & Francis Journals, vol. 13(3), pages 353-394.
    3. Blanchard, Olivier J. & Summers, Lawrence H., 1987. "Hysteresis in unemployment," European Economic Review, Elsevier, vol. 31(1-2), pages 288-295.
    4. Abraham, Katharine G & Katz, Lawrence F, 1986. "Cyclical Unemployment: Sectoral Shifts or Aggregate Disturbances?," Journal of Political Economy, University of Chicago Press, vol. 94(3), pages 507-522, June.
    5. Stegman, A. & Stegman, T., 1999. "Labour Market Flexibility, the Beveridge Curve, and the Output-Employment Ratio in Australia," Papers 99/16, New South Wales - School of Economics.
    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. W D A Bryant, 2009. "General Equilibrium:Theory and Evidence," World Scientific Books, World Scientific Publishing Co. Pte. Ltd., number 6875, September.
    2. Alison Stegman, 2011. "Sectoral Productivity, Structural Change and Convergence," CAMA Working Papers 2011-32, Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University.
    3. Paul Oslington, 2012. "General Equilibrium: Theory and Evidence," The Economic Record, The Economic Society of Australia, vol. 88(282), pages 446-448, September.

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