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Regional Labour Market Adjustment to Competition Policy Reforms: A Dynamic CGE Framework for Assessment

Author

Listed:
  • James Giesecke

    (Monash University)

  • John R. Madden

    (Monash University)

Abstract

In this paper we investigate the impact on regional labour markets of an increase in primary factor productivity in the Utilities sector. We conjecture that such an increase in productivity is illustrative of the direct effects of national competition policy (NCP). We compute, at the regional level, indices of net labour inputs that are lost from such a productivity shock, finding that the direct effects of NCP involve significant labour market adjustment costs. However, those critics of competition policy reforms who have focussed on adjustment costs have ignored important general equilibrium effects such as the mitigation of adjustment costs in other industries, and, in particular, the effects on labour market adjustment from state government fiscal reactions. We also find that, so long as these general equilibrium effects are modelled, policy makers interested in regional adjustment costs can use indices of the change in regional employment and unemployment as good proxies for the extent of regional labour market adjustment costs.

Suggested Citation

  • James Giesecke & John R. Madden, 2003. "Regional Labour Market Adjustment to Competition Policy Reforms: A Dynamic CGE Framework for Assessment," Australian Journal of Labour Economics (AJLE), Bankwest Curtin Economics Centre (BCEC), Curtin Business School, vol. 6(3), pages 409-433, September.
    • Handle: RePEc:ozl:journl:v:6:y:2003:i:3:p:409-433
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    References listed on IDEAS

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    1. John Quiggin, 1997. "Estimating the Benefits of Hilmer and Related Reforms," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 30(3), pages 256-272, September.
    2. Nicolaas Groenewold, 1997. "Does Migration Equalise Regional Unemployment Rates? Evidence From Australia," Papers in Regional Science, Wiley Blackwell, vol. 76(1), pages 1-20, January.
    3. James Giesecke, 2002. "Explaining regional economic performance: An historical application of a dynamic multi-regional CGE model," Review of Economic Design, Springer;Society for Economic Design, vol. 81(2), pages 247-278, April.
    4. John Whiteman, 1999. "The Potential Benefits of Hilmer and Related Reforms: Electricity Supply," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 32(1), pages 17-30, March.
    5. Jeff Borland, 1996. "Labour Market Flows Data for Australia," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 29(2), pages 225-235, April.
    6. James A. Giesecke & John R. Madden, 2003. "A Large†Scale Dynamic Multi†Regional Cge Model with an Illustrative Application," Review of Urban & Regional Development Studies, Wiley Blackwell, vol. 15(1), pages 02-25, March.
    7. Jones, Rich & Whalley, John, 1989. "A Canadian regional general equilibrium model and some applications," Journal of Urban Economics, Elsevier, vol. 25(3), pages 368-404, May.
    8. James Giesecke, 2003. "Targeting Regional Output with State Government Fiscal Instruments: a Dynamic Multi‐regional CGE Analysis," Australian Economic Papers, Wiley Blackwell, vol. 42(2), pages 214-233, June.
    9. Liam Lenten, 2000. "The Profile of Labour Force Discouragement in Australia," Australian Journal of Labour Economics (AJLE), Bankwest Curtin Economics Centre (BCEC), Curtin Business School, vol. 4(1), pages 3-17, March.
    10. Guy Debelle & James Vickery, 1999. "Labour Market Adjustment: Evidence on Interstate LabourMobility," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 32(3), pages 249-263, September.
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    Cited by:

    1. Ahmed, Vaqar, 2006. "Regional economic modelling: evaluating existing methods and models for constructing an Irish prototype," MPRA Paper 7650, University Library of Munich, Germany.
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    More about this item

    Keywords

    Urban; Rural; and Regional Economics: Regional Migration; Regional Labor Markets; Population; General Regional Economics: Econometric and Input-Output Models; Other Models; Computable and Other Applied General Equilibrium Models; Mobility; Unemployment; and Vacancies: General; Technological Change: Government Policy;
    All these keywords.

    JEL classification:

    • R23 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Regional Migration; Regional Labor Markets; Population
    • R15 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Econometric and Input-Output Models; Other Methods
    • D58 - Microeconomics - - General Equilibrium and Disequilibrium - - - Computable and Other Applied General Equilibrium Models
    • J60 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - General
    • O38 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Government Policy

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