Where is full employment?
AbstractUnemployment in Australia is now at its lowest in over 30 years. This experience of low rates of unemployment has prompted a number of statements that the Australian economy is at or very close to full employment. However, even though unemployment is low in comparison with the previous 30 years, it is greater than the rates experienced in the 1950s and 1960s, during which the average was slightly below two per cent. Furthermore, the 4.4 per cent rate of unemployment in April 2007 included 84,000 who had been unemployed for more than a year. These doubts about whether the Australian economy is currently at full employment are supported by findings of a body of research reported in this paper. This research suggests that, given current policy settings on labour market regulation, microeconomic reform and welfare support, full employment may occur at a rate of unemployment as low as 2.5 per cent. The estimation of this low rate of unemployment is based on a model of a range of equilibrium rates of unemployment.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 5404.
Date of creation: Jul 2007
Date of revision:
Publication status: Published in Dialogue 2.26(2007): pp. 81-92
full employment; range of equilibria; Keynesian economics;
Other versions of this item:
- E0 - Macroeconomics and Monetary Economics - - General
This paper has been announced in the following NEP Reports:
- NEP-ALL-2007-10-27 (All new papers)
- NEP-LAB-2007-10-27 (Labour Economics)
- NEP-MAC-2007-10-27 (Macroeconomics)
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