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Common Cycles in Labour Market Separation Rates for Australian States

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  • Robert Dixon

Abstract

There is a considerable body of evidence showing that it is the inflow into unemployment that drives the unemployment rate up and down and so from a policy point of view an important question is whether or not movements in state inflow reflect the impact of state-specific shocks or common shocks affecting the entire economy This paper reports the results of using principal components analysis to search for a common cycle in time series data for the rate at which people are leaving employment and moving to unemployment in the six states of Australia. It is concluded that there is a common cyclical component to each of the state’s separation rates but that it accounts for only a small part of the total variation we observe in the data set. In addition there are large idiosyncratic variations especially in the case of three of the six states. These findings strengthen the case for regional labour market policy in Australia.

Suggested Citation

  • Robert Dixon, 2007. "Common Cycles in Labour Market Separation Rates for Australian States," Department of Economics - Working Papers Series 991, The University of Melbourne.
    • Handle: RePEc:mlb:wpaper:991
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    File URL: http://fbe.unimelb.edu.au/__data/assets/pdf_file/0011/802793/991.pdf
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    References listed on IDEAS

    as
    1. Carvalho, Vasco M. & Harvey, Andrew C., 2005. "Growth, cycles and convergence in US regional time series," International Journal of Forecasting, Elsevier, vol. 21(4), pages 667-686.
    2. Dixon, R., 2001. "Australian Labour Force Data: How Representative is the 'Population Represented by the Matched Sample'?," Department of Economics - Working Papers Series 772, The University of Melbourne.
    3. Robert Dixon & John Freebairn & Guay Lim, 2003. "Why are recessions as deep as they are? The behaviour over time of the outflow from unemployment: a new perspective," Australian Journal of Labour Economics (AJLE), Bankwest Curtin Economics Centre (BCEC), Curtin Business School, vol. 6(1), pages 37-64, March.
    4. repec:bla:ecorec:v:77:y:2001:i:238:p:252-69 is not listed on IDEAS
    5. Balakrishnan, Ravi & Michelacci, Claudio, 2001. "Unemployment dynamics across OECD countries," European Economic Review, Elsevier, vol. 45(1), pages 135-165, January.
    6. Jeff Borland, 1996. "Labour Market Flows Data for Australia," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 29(2), pages 225-235, April.
    7. Robert Dixon & Muhammad Mahmood, 2006. "Hans Singer's model of the severity of recessions," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 30(6), pages 835-846, November.
    8. Robert Dixon & David Shepherd, 2001. "Trends and Cycles in Australian State and Territory Unemployment Rates," The Economic Record, The Economic Society of Australia, vol. 77(238), pages 252-269, September.
    9. William Foster, 1981. "Gross Flows in the Australian Labour Market A First Look," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 14(4), pages 57-64, December.
    10. Simon Burgess & Hélène Turon, 2005. "Unemployment dynamics in Britain," Economic Journal, Royal Economic Society, vol. 115(503), pages 423-448, April.
    11. Robert Dixon, 2001. "Australian Labour Force Data: How Representative is the ‘Population Represented by the Matched Sample’?," The Economic and Labour Relations Review, , vol. 12(2), pages 303-330, December.
    12. Russell Smyth, 2003. "Unemployment Hysteresis in Australian States and Territories: Evidence from Panel Data Unit Root Tests," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 36(2), pages 181-192, June.
    13. Nicolaas Groenewold & A. J. Hagger, 2003. "Natural-rate Estimates for the Australian States: An SVAR Approach," Regional Studies, Taylor & Francis Journals, vol. 37(3), pages 251-263.
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    More about this item

    Keywords

    Unemployment; Cycles; Principal components analysis; Australia;
    All these keywords.

    JEL classification:

    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search
    • R23 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Regional Migration; Regional Labor Markets; Population

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