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How Many Jobs is 23,510, Really?

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  • Bruce Chapman

    () (The Australian National University, Research School of Social Sciences (RSSS) - Economics Program; The Australian National University (ANU) - Crawford School of Public Policy)

Abstract

It is commonplace in Australian policy debate for groups presumed to be adversely affected by proposed policies to provide estimates of the undesirable consequences of change. A fashionable form relates to predictions of job losses for the group affected, usually accompanied by counter-claims made by the government of the day or other groups in favour of the policy. A highly public example of the above is the claim by the Minerals Council of Australia (MCA), based on work done in 2009 by Concept Economics (2009) that the then-planned Emissions Trading Scheme (ETS) would result in 23,510 fewer jobs in Australian mining than would otherwise be the case. A major background issue is that most economists would argue that any changes in the relative price of carbon-producing output must also be associated with offsetting increases in employment as a result of the higher level of activity in, for example, alternative energy production, and this is perhaps the critical point in the jobs debate concerning the consequences of policy reform. While we acknowledge this fact, the very large "job loss" figure might be a frighteningly large number for many observers, so we address the question: how many jobs is 23,510, really? Our research reports on findings using three different data series and methods to put into context the supposed jobs loss figure. The paper presents analyses of different data sets aimed at improving the understanding of, and putting into an aggregate economy context, the projected mining sector "job losses" as a result of the 2009 planned ETS. While the focus is on the ETS and mining, the illustrations apply to almost all public and political debate concerning the meaning of job loss projections from anticipated policy reform in an aggregate labour market context. It matters, for example, for the Murray Darling Basin Plan. We recognise that there are some weaknesses with respect to the data and methods used. Even so, a very clear and consistent message has come through. It is that the projected job losses from the ETS, particularly when considered over a 10 year time horizon, are in a statistical sense close to invisible with respect to employment and unemployment stocks, and trivial with respect to aggregate flows in the labour market. Also, it is apparently the case that with respect to mining sector employment the projected losses are a very small proportion of overall inflows to and outflows from mining. Further, it seems to be the case that those leaving mining periods of growth are not then entering a protracted period, and more likely any period at all, of unemployment. Our results should not be taken to mean that economic policy reform is costless to all employees who might be affected by sectoral changes in the labour market, and there remain clear roles for government to minimise the personal costs for those so disadvantaged. As well, the details of this research cannot be translated into precise analyses of the employment effects of the carbon price policy being developed by the current government. But the essential points concerning the size and meaning of mining sector employment effects should not be in dispute; the alleged "jobs losses" aspect of the climate change policy debate is not in any sense important to the overall discourse.

Suggested Citation

  • Bruce Chapman, 2011. "How Many Jobs is 23,510, Really?," Crawford School Research Papers 1104, Crawford School of Public Policy, The Australian National University.
  • Handle: RePEc:een:crwfrp:1104
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    File URL: http://www.crawford.anu.edu.au/pdf/crwf_ssrn/crwfrp_1104.pdf
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    References listed on IDEAS

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    1. Steven J. Davis & John Haltiwanger, 1992. "Gross Job Creation, Gross Job Destruction, and Employment Reallocation," The Quarterly Journal of Economics, Oxford University Press, vol. 107(3), pages 819-863.
    2. Robert E. Hall, 2005. "Job Loss, Job Finding, and Unemployment in the U.S. Economy Over the Past Fifty Years," NBER Working Papers 11678, National Bureau of Economic Research, Inc.
    3. John Baldwin & Timothy Dunne & John Haltiwanger, 1998. "A Comparison Of Job Creation And Job Destruction In Canada And The United States," The Review of Economics and Statistics, MIT Press, vol. 80(3), pages 347-356, August.
    4. R. Quentin Grafton & Qiang Jiang, 2010. "Economics of Drought, Water Diversions, Water Recovery and Climate Change in the Murray‚ÄźDarling Basin," Centre for Water Economics, Environment and Policy Papers 1001, Centre for Water Economics, Environment and Policy, Crawford School of Public Policy, The Australian National University.
    5. 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.
    6. Borland, Jeff, 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.
    7. 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.
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    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. On job loss estimates from regulation
      by Economic Logician in Economic Logic on 2011-10-21 19:01:00

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    Cited by:

    1. Delina, Laurence L. & Diesendorf, Mark, 2013. "Is wartime mobilisation a suitable policy model for rapid national climate mitigation?," Energy Policy, Elsevier, vol. 58(C), pages 371-380.

    More about this item

    Keywords

    Mining employment; job flows; carbon pricing policies; unemployment;

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • E27 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Forecasting and Simulation: Models and Applications
    • E60 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - General
    • J20 - Labor and Demographic Economics - - Demand and Supply of Labor - - - General
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • J60 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - General
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming

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