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An Examination of Net Flows in the Australian Labour Market

Author

Listed:
  • Robert Dixon

    () (The University of Melbourne)

  • John Freebairn

    (The University of Melbourne)

  • Guay Lim

    (The University of Melbourne)

Abstract

In this paper we investigate the behaviour of net flows of persons between employment, unemployment and not in the labour force in Australia between 1979-2003 and the relationship of these flows to changes in the unemployment rate over that period. We find that: flows from unemployment to employment exceed flows from employment to unemployment and that this is the case even in recessions; flows from employment to not in the labour force exceed flows from not in the labour force to employment and that this is the case even in booms, and; flows from not in the labour force to unemployment exceed flows from unemployment to not in the labour force and that this is the case even in recessions. Another important finding is that the reason why the participation rate is negatively correlated with the unemployment rate is because net flows between employment and not in the labour force and net flows between employment and unemployment are highly and positively correlated. This suggests that the so-called ‘discouraged-unemployed-worker’ effect is not a credible explanation for the endogeneity of the participation rate.

Suggested Citation

  • Robert Dixon & John Freebairn & Guay Lim, 2005. "An Examination of Net Flows in the Australian Labour Market," Australian Journal of Labour Economics (AJLE), Bankwest Curtin Economics Centre (BCEC), Curtin Business School, vol. 8(1), pages 25-42, March.
  • Handle: RePEc:ozl:journl:v:8:y:2005:i:1:p:25-42
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    Citations

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    Cited by:

    1. 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.
    2. 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.
    3. Chew Lian Chua & Robert Dixon & G. C. Lim, 2007. "What Drives Worker Flows?," Melbourne Institute Working Paper Series wp2007n34, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne.
    4. 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 Economics & Policy, Crawford School of Public Policy, The Australian National University.
    5. 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.

    More about this item

    Keywords

    Mobility; Unemployment; and Vacancies; Unemployment; Models; Duration; Incidence; and Job Search Business Fluctuations; Cycles;

    JEL classification:

    • J60 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - General
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles

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