Where is full employment?
Unemployment in Australia is now at its lowest in over 30 years. This experience of low rates of unemployment has prompted a number of statements that the Australian economy is at or very close to full employment. However, even though unemployment is low in comparison with the previous 30 years, it is greater than the rates experienced in the 1950s and 1960s, during which the average was slightly below two per cent. Furthermore, the 4.4 per cent rate of unemployment in April 2007 included 84,000 who had been unemployed for more than a year. These doubts about whether the Australian economy is currently at full employment are supported by findings of a body of research reported in this paper. This research suggests that, given current policy settings on labour market regulation, microeconomic reform and welfare support, full employment may occur at a rate of unemployment as low as 2.5 per cent. The estimation of this low rate of unemployment is based on a model of a range of equilibrium rates of unemployment.
|Date of creation:||Jul 2007|
|Date of revision:|
|Publication status:||Published in Dialogue 2.26(2007): pp. 81-92|
|Contact details of provider:|| Postal: Ludwigstraße 33, D-80539 Munich, Germany|
Web page: https://mpra.ub.uni-muenchen.de
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References listed on IDEAS
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- Ian M. McDonald, 1993. "Long-Term Unemployment and Macroeconomic Policy," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 26(2), pages 31-34.
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Levine's Working Paper Archive
7656, David K. Levine.
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- W. M. Corden, 1979. "Wages, Iflation and Unemployment," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 12(1), pages 69-70.
- Ian M. McDonald & Hugh Sibly, 2005. "The Diamond Of Macroeconomic Equilibria And Non-Inflationary Expansion," Metroeconomica, Wiley Blackwell, vol. 56(3), pages 393-409, 07.
- Lixin Cai & Bob Gregory, 2005. "Unemployment Duration and Inflows onto the Disability Support Pension Program: Evidence from FaCS LDS Data," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 38(3), pages 233-252, 09.
- McDonald, Ian M & Sibly, Hugh, 2001. "How Monetary Policy Can Have Permanent Real Effects with Only Temporary Nominal Rigidity," Scottish Journal of Political Economy, Scottish Economic Society, vol. 48(5), pages 532-46, November.
- Corden, W M, 1979. "Wages and Unemployment in Australia," The Economic Record, The Economic Society of Australia, vol. 55(148), pages 1-19, March.
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