IDEAS home Printed from https://ideas.repec.org/a/bla/ecorec/v61y1985i3p629-643.html
   My bibliography  Save this article

Equilibrium Unemployment in Australia: Concepts and Measurement

Author

Listed:
  • P. K. TRIVEDI
  • G. M. BAKER

Abstract

This paper reviews some concepts of equilibrium unemployment and outlines the fundamental difficulties facing any attempt to produce estimates of the equilibrium rate of unemployment. It develops simple quasi‐reduced form models of aggregate unemployment based on rival non market‐clearing and market‐clearing theories. These equations form the basis of an empirical model of aggregate unemployment in Australia since 1969. The empirical evidence suggests that most of the observed increase in unemployment can be attributed to cyclical rather than structural‐frictional factors. However, stylized explanations of cyclical unemployment exclusively along the lines of Keynesian, Classical or equilibrium search theory are found inadequate.

Suggested Citation

  • P. K. Trivedi & G. M. Baker, 1985. "Equilibrium Unemployment in Australia: Concepts and Measurement," The Economic Record, The Economic Society of Australia, vol. 61(3), pages 629-643, September.
    • Handle: RePEc:bla:ecorec:v:61:y:1985:i:3:p:629-643
    DOI: 10.1111/j.1475-4932.1985.tb02018.x
    as

    Download full text from publisher

    File URL: https://doi.org/10.1111/j.1475-4932.1985.tb02018.x
    Download Restriction: no
    File URL: https://libkey.io/10.1111/j.1475-4932.1985.tb02018.x?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Lilien, David M, 1982. "Sectoral Shifts and Cyclical Unemployment," Journal of Political Economy, University of Chicago Press, vol. 90(4), pages 777-793, August.
    2. Solow, Robert M, 1980. "On Theories of Unemployment," American Economic Review, American Economic Association, vol. 70(1), pages 1-11, March.
    3. Edmond Malinvaud & Jean-Paul Fitoussi (ed.), 1980. "Unemployment in Western Countries," International Economic Association Series, Palgrave Macmillan, number 978-1-349-16407-3, December.
    4. Bjorklund, Anders & Holmlund, Bertil, 1981. "The Duration of Unemployment and Unexpected Inflation: An Empirical Analysis," American Economic Review, American Economic Association, vol. 71(1), pages 121-131, March.
    5. Nickell, Stephen J, 1982. "The Determinants of Equilibrium Unemployment in Britain," Economic Journal, Royal Economic Society, vol. 92(367), pages 555-575, September.
    6. Breusch, T S & Pagan, A R, 1979. "A Simple Test for Heteroscedasticity and Random Coefficient Variation," Econometrica, Econometric Society, vol. 47(5), pages 1287-1294, September.
    7. J. D. Pitchford, 1983. "Unemployment, Real Wages and the Money Supply in Australia," The Economic Record, The Economic Society of Australia, vol. 59(2), pages 118-131, June.
    8. H. N. Johnston & R. B. Campbell & R. M. Simes, 1978. "The Impact Of Wages And Prices On Unemployment," Economic Papers, The Economic Society of Australia, vol. 1(60), pages 18-37, December.
    9. Gordon, Robert J, 1981. "Output Fluctuations and Gradual Price Adjustment," Journal of Economic Literature, American Economic Association, vol. 19(2), pages 493-530, June.
    10. Seater, John J, 1979. "Job Search and Vacancy Contacts," American Economic Review, American Economic Association, vol. 69(3), pages 411-419, June.
    11. Pitchford, J D, 1983. "Unemployment, Real Wages and the Money Supply in Australia," The Economic Record, The Economic Society of Australia, vol. 59(165), pages 118-131, June.
    12. Hargreaves Heap, S P, 1980. "Choosing the Wrong 'Natural' Rate: Accelerating Inflation or Decelerating Employment and Growth?," Economic Journal, Royal Economic Society, vol. 90(359), pages 611-620, September.
    13. James Tobin, 1980. "Stabilization Policy Ten Years After," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 11(1, Tenth ), pages 19-90.
    14. Tobin, James, 1972. "Inflation and Unemployment," American Economic Review, American Economic Association, vol. 62(1), pages 1-18, March.
    15. Lucas, Robert Jr. & Prescott, Edward C., 1974. "Equilibrium search and unemployment," Journal of Economic Theory, Elsevier, vol. 7(2), pages 188-209, February.
    16. Pagan, Adrian, 1984. "Econometric Issues in the Analysis of Regressions with Generated Regressors," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 25(1), pages 221-247, February.
    17. Lucas, Robert E, Jr & Rapping, Leonard A, 1969. "Real Wages, Employment, and Inflation," Journal of Political Economy, University of Chicago Press, vol. 77(5), pages 721-754, Sept./Oct.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. A.J. Hagger & N. Groenewold, 2000. "Time to Ditch the Natural rate?," Economics Discussion / Working Papers 00-09, The University of Western Australia, Department of Economics.
    2. Bårdsen Gunnar & Hurn Stanley & McHugh Zöe, 2012. "Asymmetric Unemployment Rate Dynamics in Australia," Studies in Nonlinear Dynamics & Econometrics, De Gruyter, vol. 16(1), pages 1-22, January.
    3. P. K. Trtvedi & J. N. Alexander, 1988. "Incorporating International Competitiveness into the Demand for Labour Function: Some Issues of Specification and Interpretation," The Economic Record, The Economic Society of Australia, vol. 64(3), pages 196-208, September.
    4. R.W. Peters & A. Petridis, 1988. "Potential Output and Okun's Law for Australia Since 1979 - Implications for Unemployment," Economics Discussion / Working Papers 88-10, The University of Western Australia, Department of Economics.
    5. Jerome Fahrer & Andrew Pease, 1993. "The Unemployment/Vacancy Relationship in Australia," RBA Research Discussion Papers rdp9305, Reserve Bank of Australia.
    6. Jeff Borland & Ian McDonald, 2000. "Labour Market Models of Unemployment in Australia," Melbourne Institute Working Paper Series wp2000n15, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne.
    7. Anh T. Le & Paul W. Miller, 2000. "Australia's Unemployment Problem," The Economic Record, The Economic Society of Australia, vol. 76(232), pages 74-104, March.
    8. N. Groenewold & A.J. Hagger, 1998. "The Australian Natural Rate of Unemployment: Some estimates from a structural VAR," Economics Discussion / Working Papers 98-23, The University of Western Australia, Department of Economics.
    9. R.M. Simes & C.J. Richardson, 1987. "Wage Determination In Australia," The Economic Record, The Economic Society of Australia, vol. 63(2), pages 144-155, June.
    10. Lenehan, A. J., 1996. "The macroeconomic effects of the postwar baby boom: Evidence from Australia," Journal of Macroeconomics, Elsevier, vol. 18(1), pages 155-169.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Daniel S. Hamermesh, 1983. "Inflation and Labor-Market Adjustment," NBER Working Papers 1153, National Bureau of Economic Research, Inc.
    2. Fortin, Pierre, 1988. "La persistance du chômage : synthèse," L'Actualité Economique, Société Canadienne de Science Economique, vol. 64(4), pages 545-558, décembre.
    3. Tsukuda, Yoshihiko & Miyakoshi, Tatsuyoshi, 1999. "The Japanese Labor Markets: Unemployment and Vacancies," Journal of the Japanese and International Economies, Elsevier, vol. 13(2), pages 91-118, June.
    4. Bewley, Truman F., 1998. "Why not cut pay?," European Economic Review, Elsevier, vol. 42(3-5), pages 459-490, May.
    5. repec:eee:labchp:v:2:y:1986:i:c:p:1001-1035 is not listed on IDEAS
    6. Landon, Stuart, 1995. "Testing aggregate neutrality with heterogeneous sectors," Journal of Macroeconomics, Elsevier, vol. 17(1), pages 131-148.
    7. repec:rim:rimwps:27-08 is not listed on IDEAS
    8. Eichengreen, Barry & Hatton, Tim, 1988. "Interwar Unemployment in International Perspective," Institute for Research on Labor and Employment, Working Paper Series qt7bw188gk, Institute of Industrial Relations, UC Berkeley.
    9. Herrendorf, Berthold & Rogerson, Richard & Valentinyi, Ákos, 2014. "Growth and Structural Transformation," Handbook of Economic Growth, in: Philippe Aghion & Steven Durlauf (ed.), Handbook of Economic Growth, edition 1, volume 2, chapter 6, pages 855-941, Elsevier.
    10. Bauer Anja & Weber Enzo & Keveloh Kristin & Mamertino Mariano, 2023. "Competing for Jobs: How COVID-19 Changes Search Behaviour in the Labour Market," German Economic Review, De Gruyter, vol. 24(4), pages 323-347, December.
    11. John Haltiwanger & Mark Plant, 1984. "How Should We Measure Slackness in the Labor Market?," UCLA Economics Working Papers 343, UCLA Department of Economics.
    12. Michael C. Keeley, 1984. "Cyclical unemployment and employment: effects of labor force entry and exit," Economic Review, Federal Reserve Bank of San Francisco, issue Sum, pages 5-25.
    13. Giovanni Gallipoli & Gianluigi Pelloni, 2013. "Macroeconomic Effects of Job Reallocations: A Survey," Review of Economic Analysis, Digital Initiatives at the University of Waterloo Library, vol. 5(2), pages 127-176, December.
    14. Andrew Figura, 2003. "The effect of restructuring on unemployment," Finance and Economics Discussion Series 2003-56, Board of Governors of the Federal Reserve System (U.S.).
    15. Bårdsen Gunnar & Hurn Stanley & McHugh Zöe, 2012. "Asymmetric Unemployment Rate Dynamics in Australia," Studies in Nonlinear Dynamics & Econometrics, De Gruyter, vol. 16(1), pages 1-22, January.
    16. McAleer, Michael, 1995. "The significance of testing empirical non-nested models," Journal of Econometrics, Elsevier, vol. 67(1), pages 149-171, May.
    17. Jovanovic, Boyan & Moffitt, Robert, 1990. "An Estimate of a Sectoral Model of Labor Mobility," Journal of Political Economy, University of Chicago Press, vol. 98(4), pages 827-852, August.
    18. Charles T. Carlstrom, 1987. "Implicit contracts, on-the-job search and involuntary unemployment," Working Papers (Old Series) 8712, Federal Reserve Bank of Cleveland.
    19. Bruce Fallick & Charles A. Fleischman, 2001. "The importance of employer-to-employer flows in the U.S. labor market," Finance and Economics Discussion Series 2001-18, Board of Governors of the Federal Reserve System (U.S.).
    20. Plamen Nenov, 2013. "Regional Mismatch and Labor Reallocation in an Equilibrium Model of Migration," 2013 Meeting Papers 565, Society for Economic Dynamics.
    21. Wesselbaum, Dennis, 2011. "Sector-specific productivity shocks in a matching model," Economic Modelling, Elsevier, vol. 28(6), pages 2674-2682.
    22. Billi, Roberto M., 2018. "Price level targeting and risk management," Economic Modelling, Elsevier, vol. 73(C), pages 163-173.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bla:ecorec:v:61:y:1985:i:3:p:629-643. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: https://edirc.repec.org/data/esausea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.