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Cyclical Flows in Australian Labour Markets

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  • NATALIA PONOMAREVA
  • JEFFREY SHEEN

Abstract

Using a four‐state model, we show that Australian labour markets exhibited more mobility after 1980, but most gains occurred before 1993. We find large and significant procyclical effects in the transition probabilities from unemployment to jobs, which contribute significantly to the variations of unemployment. Transitions from jobs to unemployment are countercyclical, but the effects are small and in most cases insignificant. Although job‐losing and job‐finding both matter for the evolution of unemployment over the whole business cycle, job‐finding has become more important in recent years. During recessions, job‐finding is a bigger issue. Each transition probability explains only a small proportion of participation rates.

Suggested Citation

  • Natalia Ponomareva & Jeffrey Sheen, 2010. "Cyclical Flows in Australian Labour Markets," The Economic Record, The Economic Society of Australia, vol. 86(s1), pages 35-48, September.
    • Handle: RePEc:bla:ecorec:v:86:y:2010:i:s1:p:35-48
    DOI: 10.1111/j.1475-4932.2010.00658.x
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    References listed on IDEAS

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    1. Jerome Fahrer & Alexandra Heath, 1992. "The Evolution of Employment and Unemployment in Australia," RBA Research Discussion Papers rdp9215, Reserve Bank of Australia.
    2. Gary Solon & Ryan Michaels & Michael W. L. Elsby, 2009. "The Ins and Outs of Cyclical Unemployment," American Economic Journal: Macroeconomics, American Economic Association, vol. 1(1), pages 84-110, January.
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    7. Robert Dixon & John Freebairn & G. C. Lim, 2004. "A Framework For Understanding Changes In The Unemployment Rate In A Flows Context: An Examination Net Flows In The Australian Labour Market," Department of Economics - Working Papers Series 910, The University of Melbourne.
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    1. repec:spo:wpmain:info:hdl:2441/2cnlir7arl8aaqa8hvkgkr7mqn is not listed on IDEAS
    2. Ponomareva, Natalia & Sheen, Jeffrey, 2013. "Australian labor market dynamics across the ages," Economic Modelling, Elsevier, vol. 35(C), pages 453-463.
    3. 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.
    4. Bruce Chapman & Kiatanantha Lounkaew, 2013. "How Many Jobs Is 23,510, Really?," Australian Journal of Labour Economics (AJLE), Bankwest Curtin Economics Centre (BCEC), Curtin Business School, vol. 16(2), pages 259-275.
    5. Bruce Chapman & Kiatanantha Lounkaew, 2011. "How Many Jobs is 23,510, Really? Recasting the Mining Job Loss Debate," CCEP Working Papers 1106, Centre for Climate & Energy Policy, Crawford School of Public Policy, The Australian National University.
    6. Sheen, Jeffrey & Wang, Ben Zhe, 2016. "Assessing labor market frictions in a small open economy," Journal of Macroeconomics, Elsevier, vol. 48(C), pages 231-251.
    7. Rogerson, Richard & Shimer, Robert, 2011. "Search in Macroeconomic Models of the Labor Market," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 4, chapter 7, pages Pages: 61, Elsevier.
    8. repec:hal:spmain:info:hdl:2441/2cnlir7arl8aaqa8hvkgkr7mqn is not listed on IDEAS
    9. Petr Maleček, 2014. "Toky dlouhodobé nezaměstnanosti [Long-Term Unemployment Flows]," Politická ekonomie, Prague University of Economics and Business, vol. 2014(4), pages 560-576.
    10. Noel Gaston & Gulasekaran Rajaguru, 2015. "A Markov-switching structural vector autoregressive model of boom and bust in the Australian labour market," Empirical Economics, Springer, vol. 49(4), pages 1271-1299, December.

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