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The Unemployment/Vacancy Relationship in Australia

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Author Info
Jerome Fahrer (Reserve Bank of Australia)
Andrew Pease (Reserve Bank of Australia)
Abstract

One of the most important features of the Australian economy in the past two decades has been the structural deterioration of labour market performance, reflected in both an increase in the average rate of unemployment and an outward shift in the Beveridge Curve, which depicts the relationship between unemployment and vacancies. This paper attempts to uncover some of the causes for this structural deterioration, in terms of the factors affecting the UV relationship. We find that the Beveridge Curve shifted out around 1974, consistent with an increase in the equilibrium rate of unemployment which is generally agreed to have occurred around that time. Using gross labour market flow data, we also investigate the determinants of the equilibrium Beveridge Curve in the 1980s. We find that the Beveridge Curve shifted further outwards in the 1980s. The most important determinant of this shift was the decline in the search effectiveness of the unemployed, reflected in the increasing incidence of long-term unemployment. Offsetting this influence during this time was the declining labour force participation of men, and the very large increases in female employment.

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Paper provided by Reserve Bank of Australia in its series RBA Research Discussion Papers with number rdp9305.

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Date of creation: Jun 1993
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Handle: RePEc:rba:rbardp:rdp9305

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Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

  1. Trivedi, P K & Baker, G M, 1985. "Equilibrium Unemployment in Australia: Concepts and Measurement," The Economic Record, The Economic Society of Australia, vol. 61(174), pages 629-43, September.
  2. Robert J. Hodrick & Edward Prescott, 1981. "Post-War U.S. Business Cycles: An Empirical Investigation," Discussion Papers 451, Northwestern University, Center for Mathematical Studies in Economics and Management Science. [Downloadable!]
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  3. Jackman, Richard & Layard, Richard, 1991. "Does Long-term Unemployment Reduce a Person's Chance of a Job? A Time-Series Test," Economica, London School of Economics and Political Science, vol. 58(229), pages 93-106, February. [Downloadable!] (restricted)
  4. Atkinson, Anthony B & Micklewright, John, 1991. "Unemployment Compensation and Labor Market Transitions: A Critical Review," Journal of Economic Literature, American Economic Association, vol. 29(4), pages 1679-1727, December. [Downloadable!] (restricted)
  5. Jackman, R & Layard, Richard & Pissarides, C, 1989. "On Vacancies," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 51(4), pages 377-94, November.
  6. Olivier Jean Blanchard, 1989. "Two Tools for Analyzing Unemployment," NBER Working Papers 3168, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  7. Budd, Alan & Levine, Paul & Smith, Peter, 1988. "Unemployment, Vacancies and the Long-term Unemployed," Economic Journal, Royal Economic Society, vol. 98(393), pages 1071-91, December. [Downloadable!] (restricted)
  8. Junankar, P.N. & Kapuscinski, C.A., 1990. "The Duration Of Unemployment In Australia: Memory And Measurement," CEPR Discussion Papers 238, Centre for Economic Policy Research, Research School of Social Sciences, Australian National University.
  9. Jerome Fahrer & Alexandra Heath, . "The Evolution of Employment and Unemployment in Australia," RBA Research Discussion Papers rdp9215, Reserve Bank of Australia.
  10. Trivedi, P K & Hui, W T, 1987. "An Empirical Study of Long-term Unemployment in Australia," Journal of Labor Economics, University of Chicago Press, vol. 5(1), pages 20-42, January. [Downloadable!] (restricted)
  11. Borsch-Supan, Axel H, 1991. "Panel Data Analysis of the Beveridge Curve: Is There a Macroeconomic Relation between the Rate of Unemployment and the Vacancy Rate?," Economica, London School of Economics and Political Science, vol. 58(231), pages 279-97, August. [Downloadable!] (restricted)
  12. Withers, Glenn & Pope, David, 1985. "Immigration and Unemployment," The Economic Record, The Economic Society of Australia, vol. 61(173), pages 554-63, June.
  13. Akerlof, George A & Yellen, Janet L, 1985. "Unemployment through the Filter of Memory," The Quarterly Journal of Economics, MIT Press, vol. 100(3), pages 747-73, August. [Downloadable!] (restricted)
  14. Hansen, Bent, 1970. "Excess Demand, Unemployment, Vacancies, and Wages," The Quarterly Journal of Economics, MIT Press, vol. 84(1), pages 1-23, February. [Downloadable!] (restricted)
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  1. Jeff Borland & Ian McDonald, 2000. "Labour Market Models of Unemployment in Australia," Melbourne Institute Working Paper Series wp2000n15, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne. [Downloadable!]
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