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An Employment Equation For Australia: 1966-2001

Author

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  • Robert Dixon
  • John Freebairn
  • G C Lim

Abstract

We model the relationship between hours of work and employment and argue that unless actual hours are varying with a change in ‘standard hours’, actual hours should not appear in the long-run component of an equation for employment. If however standard hours are changing then it is desirable that this variable be incorporated into the employment equation. Our theoretical model yields an expression for the elasticity of employment with respect to standard hours which shows that the elasticity is related to the size of the premium for overtime. Using quarterly data for the period 1966:3 – 2001:3 we estimate a new employment equation for Australia incorporating standard hours of work. We find empirical support for our approach and we provide new estimates of the elasticity of employment with respect to the real wage and GDP. We also find a marked asymmetry in the response of employment to variations in real GDP and real wages in recession periods as against non-recession periods.

Suggested Citation

  • Robert Dixon & John Freebairn & G C Lim, 2004. "An Employment Equation For Australia: 1966-2001," Department of Economics - Working Papers Series 892, The University of Melbourne.
    • Handle: RePEc:mlb:wpaper:892
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    File URL: http://www.economics.unimelb.edu.au/downloads/wpapers-04/892.pdf
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    References listed on IDEAS

    as
    1. Russell, Bill & Tease, Warren, 1991. "Employment, Output and Real Wages," The Economic Record, The Economic Society of Australia, vol. 67(196), pages 34-45, March.
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    3. Philip E. T. Lewis & Garry MacDonald, 2002. "The Elasticity of Demand for Labour in Australia," The Economic Record, The Economic Society of Australia, vol. 78(240), pages 18-30, March.
    4. Guy Debelle & Troy Swann, 1998. "Stylised Facts of the Australian Labour Market," RBA Research Discussion Papers rdp9804, Reserve Bank of Australia.
    5. Steve Dowrick & Graeme Wells, 2004. "Modelling Aggregate Demand for Labour: A Critique of Lewis and MacDonald," The Economic Record, The Economic Society of Australia, vol. 80(251), pages 436-440, December.
    6. Bill Russell & Warren Tease, 1991. "Employment, Output and Real Wages," The Economic Record, The Economic Society of Australia, vol. 67(1), pages 34-45, March.
    7. Mark Wooden, 2003. "Long-Hours Working and Enterprise Bargaining," Agenda - A Journal of Policy Analysis and Reform, Australian National University, College of Business and Economics, School of Economics, vol. 10(3), pages 259-271.
    8. 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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    11. Dixon, R., 1996. "Apparent Asymmetries in the Relationship Between the Participation Rate and the Employment Rate in Australia," Department of Economics - Working Papers Series 522, The University of Melbourne.
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    Cited by:

    1. Leobardo de Jesús-Almonte & Roldán Andrés-Rosales & Yolanda Carbajal-Suárez, 2020. "Spatial analysis of manufacturing employment in Mexico, 1984-2013," Revista Desarrollo y Sociedad, Universidad de los Andes,Facultad de Economía, CEDE, vol. 84(3), pages 91-128, February.

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    More about this item

    Keywords

    Employment Determination; Demand for Labor; Australia;
    All these keywords.

    JEL classification:

    • J20 - Labor and Demographic Economics - - Demand and Supply of Labor - - - General
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand

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