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An Examination of Net Flows in the Australian Labour Market


Author Info

  • Robert Dixon

    (The University of Melbourne)

  • John Freebairn

    (The University of Melbourne)

  • Guay Lim

    (The University of Melbourne)


In this paper we investigate the behaviour of net flows of persons between employment, unemployment and not in the labour force in Australia between 1979-2003 and the relationship of these flows to changes in the unemployment rate over that period. We find that: flows from unemployment to employment exceed flows from employment to unemployment and that this is the case even in recessions; flows from employment to not in the labour force exceed flows from not in the labour force to employment and that this is the case even in booms, and; flows from not in the labour force to unemployment exceed flows from unemployment to not in the labour force and that this is the case even in recessions. Another important finding is that the reason why the participation rate is negatively correlated with the unemployment rate is because net flows between employment and not in the labour force and net flows between employment and unemployment are highly and positively correlated. This suggests that the so-called ‘discouraged-unemployed-worker’ effect is not a credible explanation for the endogeneity of the participation rate.

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Bibliographic Info

Article provided by Bankwest Curtin Economics Centre (BCEC), Curtin Business School in its journal Australian Journal of Labour Economics.

Volume (Year): 8 (2005)
Issue (Month): 1 (March)
Pages: 25-42

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Handle: RePEc:ozl:journl:v:8:y:2005:i:1:p:25-42

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Related research

Keywords: Mobility; Unemployment; and Vacancies; Unemployment; Models; Duration; Incidence; and Job Search Business Fluctuations; Cycles;

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Cited by:
  1. Bruce Chapman & Kiatanantha Lounkaew, 2013. "How Many Jobs Is 23,510, Really?," Australian Journal of Labour Economics (AJLE), Bankwest Curtin Economics Centre (BCEC), Curtin Business School, vol. 16(2), pages 259-275.
  2. Bruce Chapman & Kiatanantha Lounkaew, 2011. "How Many Jobs is 23,510, Really? Recasting the Mining Job Loss Debate," CCEP Working Papers 1106, Centre for Climate Economics & Policy, Crawford School of Public Policy, The Australian National University.
  3. Chew Lian Chua & Robert Dixon & G. C. Lim, 2007. "What Drives Worker Flows?," Melbourne Institute Working Paper Series wp2007n34, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne.


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