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Vacancies and Unemployment in Australia

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  • Phillip Chindamo
  • Lawrence Uren

Abstract

"This article examines the extent to which the Mortensen-Pissarides model of labour market search can quantitatively match business cycle fluctuations in Australia. With productivity and job-separation-rate shocks, the model fails to produce substantial volatility among unemployment or vacancies, a result similar to" "Shimer's (2005)" "findings for the United States. Examining a broader range of shocks significantly increases the magnitude of business cycle fluctuations, but still only explains roughly 25 per cent of labour market volatility. The implied volatility of wages in the model is similar to that in the data and hence excessive wage flexibility is unlikely to be central to the failure of the model as claimed in the literature." Copyright (c)2010 The University of Melbourne, Melbourne Institute of Applied Economic and Social Research.

Suggested Citation

  • Phillip Chindamo & Lawrence Uren, 2010. "Vacancies and Unemployment in Australia," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 43(2), pages 136-152.
  • Handle: RePEc:bla:ausecr:v:43:y:2010:i:2:p:136-152
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    References listed on IDEAS

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    1. Paul L. Joskow & Edward Kohn, 2002. "A Quantitative Analysis of Pricing Behavior in California's Wholesale Electricity Market During Summer 2000," The Energy Journal, International Association for Energy Economics, vol. 0(Number 4), pages 1-35.
    2. Anderson, Edward J. & Hu, Xinin & Winchester, Donald, 2007. "Forward contracts in electricity markets: The Australian experience," Energy Policy, Elsevier, pages 3089-3103.
    3. Paul Simshauser, 2008. "The Dynamic Efficiency Gains from Introducing Capacity Payments in the National Electricity Market," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, pages 349-370.
    4. Simshauser, Paul, 2009. "On Emissions Trading, Toxic Debt and the Australian Power Market," The Electricity Journal, Elsevier, vol. 22(2), pages 9-29, March.
    5. Paul Simshauser & Phillip Wild, 2009. "The Western Australian Power Dilemma ," Australian Economic Papers, Wiley Blackwell, vol. 48(4), pages 342-369, December.
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    Cited by:

    1. Chindamo, P., 2011. "Australian Labour Market Flows over the Business Cycle," Australian Bulletin of Labour, National Institute of Labour Studies, vol. 37(1), pages 127-137.
    2. Dennis Wesselbaum, 2014. "Labour Market Dynamics in Australia," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 47(2), pages 173-188, June.

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