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Labour Utilization and Wage Inflation in Australia: An Empirical Examination

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  • PETER DAWKINS
  • MARK WOODEN

Abstract

This paper tests the hypothesis that the level of labour utilization within the firm should be substituted into the Phillips Curve in place of traditional measures of excess demand. Gregory and Smith (1983) proposed overtime hours as a proxy for labour utilization within the firm. For various reasons we prefer the deviation from trend in hours worked. The results support the underlying hypothesis, and add strength to the view that to understand the process of wage inflation at the macro level we must examine the utilization of labour at the micro level of the firm.

Suggested Citation

  • Peter Dawkins & Mark Wooden, 1985. "Labour Utilization and Wage Inflation in Australia: An Empirical Examination," The Economic Record, The Economic Society of Australia, vol. 61(2), pages 516-521, June.
    • Handle: RePEc:bla:ecorec:v:61:y:1985:i:2:p:516-521
    DOI: 10.1111/j.1475-4932.1985.tb02006.x
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    References listed on IDEAS

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    1. E. Kuh, 1967. "A Productivity Theory of Wage Levels—An Alternative to the Phillips Curve," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 34(4), pages 333-360.
    2. Santomero, Anthony M & Seater, John J, 1978. "The Inflation-Unemployment Trade-off: A Critique of the Literature," Journal of Economic Literature, American Economic Association, vol. 16(2), pages 499-544, June.
    3. Nevile, John W, 1977. "Domestic and Overseas Influences on Inflation in Australia," Australian Economic Papers, Wiley Blackwell, vol. 16(28), pages 121-129, June.
    4. Edmund S. Phelps, 1968. "Money-Wage Dynamics and Labor-Market Equilibrium," Journal of Political Economy, University of Chicago Press, vol. 76, pages 678-678.
    5. Wallis, Kenneth F, 1972. "Testing for Fourth Order Autocorrelation in Qtrly Regression Equations," Econometrica, Econometric Society, vol. 40(4), pages 617-636, July.
    6. Rao, B Bhaskara, 1977. "An Analysis of the Short and Long-run Trade-offs between Unemployment and Inflation and Estimates of the Equilibrium Steady State Unemployment Rate in Australia," Australian Economic Papers, Wiley Blackwell, vol. 16(29), pages 273-284, December.
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    Cited by:

    1. Jeff Borland, 1996. "Job Creation and Job Destruction in Manufacturing Industry in Australia," The Economic Record, The Economic Society of Australia, vol. 72(216), pages 46-62, March.
    2. 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.
    3. Mahmood A. Zaidi, 1986. "Do Incomes Policies Restrain Wage Inflation? Some Evidence From Australia, Canada, and the United States," The Economic Record, The Economic Society of Australia, vol. 62(4), pages 468-484, December.
    4. John Freebairn, 1995. "Reconsidering the Marginal Welfare Cost of Taxation," The Economic Record, The Economic Society of Australia, vol. 71(2), pages 121-131, June.
    5. R.M. Simes & C.J. Richardson, 1987. "Wage Determination In Australia," The Economic Record, The Economic Society of Australia, vol. 63(2), pages 144-155, June.
    6. Nicolaas Groenewold & Leanne Taylor, 1992. "Insider Power as a Source of Hysteresis in Unemployment: Tests with Australian Data," The Economic Record, The Economic Society of Australia, vol. 68(1), pages 57-64, March.

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