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Decomposing Differences in Labour Force Status between Indigenous and Non-Indigenous Australians

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Author Info

  • Guyonne Kalb

    ()
    (Melbourne Institute of Applied Economic and Social Research, The University of Melbourne)

  • Trinh Le

    ()
    (Melbourne Institute of Applied Economic and Social Research, The University of Melbourne)

  • Boyd Hunter

    (Centre for Aboriginal Economic Policy Research, The Australian National University)

  • Felix Leung

Abstract

Despite several policy efforts to promote economic participation by Indigenous Australians, they continue to have low participation rates compared to non-Indigenous Australians. This study decomposes the gap in labour market attachment between Indigenous and non- Indigenous Australians in non-remote areas, combining two separate data sources in a novel way to obtain access to richer information than was previously possible. It shows that among women at least two thirds of the gap can be attributed to differences in the observed characteristics between the two populations. For men, the differences in observed characteristics of the two populations can account for 36 to 47 percent of the gap. A detailed decomposition shows that lower education, worse health, and larger families (particularly for women) explain the lower labour market attachment of Indigenous Australians to a substantial extent. Compared with previous studies, this study is able to explain a larger proportion of the gap in employment between Indigenous and non-Indigenous people due to being able to include a larger set of explanatory variables.

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Bibliographic Info

Paper provided by Melbourne Institute of Applied Economic and Social Research, The University of Melbourne in its series Melbourne Institute Working Paper Series with number wp2012n20.

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Length: 34 pages
Date of creation: Aug 2012
Date of revision:
Handle: RePEc:iae:iaewps:wp2012n20

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Postal: Melbourne Institute of Applied Economic and Social Research, The University of Melbourne, Victoria 3010 Australia
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Keywords: Labour market attachment; Indigenous Australians; non-linear decomposition;

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References

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  1. Benjamin J. Stephens, 2010. "The Determinants of Labour force Status Among Indigenous Australians," Australian Journal of Labour Economics (AJLE), Bankwest Curtin Economics Centre (BCEC), Curtin Business School, vol. 13(3), pages 287-312.
  2. Oaxaca, Ronald, 1973. "Male-Female Wage Differentials in Urban Labor Markets," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 14(3), pages 693-709, October.
  3. Mark Wooden & Nicole Watson, 2007. "The HILDA Survey and its Contribution to Economic and Social Research (So Far)," The Economic Record, The Economic Society of Australia, vol. 83(261), pages 208-231, 06.
  4. Cotton, Jeremiah, 1988. "On the Decomposition of Wage Differentials," The Review of Economics and Statistics, MIT Press, vol. 70(2), pages 236-43, May.
  5. Mathias Sinning & Silja Göhlmann & Thomas Bauer, 2006. "Gender Differences in Smoking Behavior," RWI Discussion Papers 0044, Rheinisch-Westfälisches Institut für Wirtschaftsforschung.
  6. Daniel A. Powers & Hirotoshi Yoshioka & Myeong-Su Yun, 2011. "mvdcmp: Multivariate decomposition for nonlinear response models," Stata Journal, StataCorp LP, vol. 11(4), pages 556-576, December.
  7. Miller, Paul W, 1989. "The Structure of Aboriginal and Non-aboriginal Youth Unemployment," Australian Economic Papers, Wiley Blackwell, vol. 28(52), pages 39-56, June.
  8. David Neumark, 1988. "Employers' Discriminatory Behavior and the Estimation of Wage Discrimination," Journal of Human Resources, University of Wisconsin Press, vol. 23(3), pages 279-295.
  9. Thomas Bauer & Mathias Sinning, 2008. "An extension of the Blinder–Oaxaca decomposition to nonlinear models," AStA Advances in Statistical Analysis, Springer, vol. 92(2), pages 197-206, May.
  10. Mathias Sinning, 2007. "Determinants of Savings and Remittances – Empirical Evidence from Immigrants to Germany," Ruhr Economic Papers 0023, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen.
  11. Jon Altman & Geoff Buchanan, 2006. "Measuring the ‘real’ indigenous economy in remote Australia using NATSISS 2002," Australian Journal of Labour Economics (AJLE), Bankwest Curtin Economics Centre (BCEC), Curtin Business School, vol. 9(1), pages 17-32, March.
  12. Reimers, Cordelia W, 1983. "Labor Market Discrimination against Hispanic and Black Men," The Review of Economics and Statistics, MIT Press, vol. 65(4), pages 570-79, November.
  13. JonC. Altman & Nicholas Biddle & BoydH. Hunter, 2009. "Prospects For 'Closing The Gap' In Socioeconomic Outcomes For Indigenous Australians?," Australian Economic History Review, Economic History Society of Australia and New Zealand, vol. 49(3), pages 225-251, November.
  14. Boyd Hunter & Matthew Gray, 2000. "Indigenous labour force status re-visited: factors associated with the discouraged worker phenomenon," Australian Journal of Labour Economics (AJLE), Bankwest Curtin Economics Centre (BCEC), Curtin Business School, vol. 4(2), pages 111-133, June.
  15. Alan S. Blinder, 1973. "Wage Discrimination: Reduced Form and Structural Estimates," Journal of Human Resources, University of Wisconsin Press, vol. 8(4), pages 436-455.
  16. Borland, Jeff & Hunter, Boyd, 2000. "Does Crime Affect Employment Status? The Case of Indigenous Australians," Economica, London School of Economics and Political Science, vol. 67(265), pages 123-44, February.
  17. Benjamin J. Stephens, 2010. "The Determinants of Labour Force Status among Indigenous Australians," Economics Discussion / Working Papers 10-11, The University of Western Australia, Department of Economics.
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