Australian labour market flows over the business cycle

This paper analyses the behaviour of Australian labour market transition rates. Since the early 1980s the job finding rate has been significantly more volatile and pro-cyclical than the job loss rate and is strongly pro-cyclical. The economic downturns in the early 1980s and early 1990s were associated with an up to 10 percentage point decline in the average job finding rate. In comparison, the recent economic downturn was associated with a less significant decline in the job finding rate. During these periods the job loss rate has shown less significant volatility. The findings of this paper suggest job search activities of workers are potentially more relevant in explaining the volatility of labour market variables such as the unemployment rate and whether emerging skills shortages can be addressed. Moreover, policies that assist job search and skills development of workers are important, as is the search intensity of workers.