An Employment Equation For Australia: 1966-2001
AbstractWe 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.
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Bibliographic InfoPaper provided by The University of Melbourne in its series Department of Economics - Working Papers Series with number 892.
Length: 44 pages
Date of creation: 2004
Date of revision:
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Postal: Department of Economics, The University of Melbourne, 5th Floor, Economics and Commerce Building, Victoria, 3010, Australia
Phone: +61 3 8344 5289
Fax: +61 3 8344 6899
Web page: http://www.economics.unimelb.edu.au
More information through EDIRC
Employment Determination; Demand for Labor; Australia;
Find related papers by 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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