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Dynamic Relationships in the Australian Labour Market: Heterogeneity and State Dependence

  • Stephen Knights

    (Balliol College Oxford, UK)

  • Mark Harris

    (Melbourne Institute of Applied Economic and Social Research, The University of Melbourne)

  • Joanne Loundes

    (Melbourne Institute of Applied Economic and Social Research, The University of Melbourne)

In this study, individual labour market dynamics are analysed using the Australian Longitudinal Survey. A random utility framework for analysing discrete choices is adopted. In this context, a model incorporating a state dependent relationship between employment outcomes is estimated. The influence on individual employment outcomes of additional variables including education, gender and unemployment benefits is also investigated. It is found that, even after controlling for observable and unobservable differences between individuals, there is strong evidence of state dependence. In certain key respects, the findings of this study differ markedly from those of other Australian labour market studies. It is expected that these findings will provide further insight into the causes of contemporary unemployment, and may constitute further evidence of a 'scarring' effect of unemployment.

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Paper provided by Melbourne Institute of Applied Economic and Social Research, The University of Melbourne in its series Melbourne Institute Working Paper Series with number wp2000n06.

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Length: 28 pages
Date of creation: May 2000
Date of revision:
Handle: RePEc:iae:iaewps:wp2000n06
Contact details of provider: Postal: Melbourne Institute of Applied Economic and Social Research, The University of Melbourne, Victoria 3010 Australia
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