Melbourne Institute of Applied Economic and Social Research - Research Publications

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    Optimal employee turnover rate: theory and evidence
    HARRIS, MARK ; Tang, Kam-Ki ; TSENG, YI-PING ( 2002-10)
    This paper investigates the quantitative effects of employee turnover on firms' productivity.The Australian Business Longitudinal Survey 1995-98, a unique survey providing firm level data on both production and employee turnover, is used as the data source. Theoretical studies have advocated that firm specific human capital and job matching to be the two major, but competing, mechanisms through which turnover affects productivity. Our results indicate that the effect of job matching dominates when turnover is"low," while the effect of firm specific human capital dominates when turnover is"high." We identify that the optimal turnover rate - the rate that maximises productivity, controlling for other factors - is about 0.3, well in excess of the sample mean. The finding suggests that further increasing the flexibility of employment arrangement for small and medium Australian enterprises could yield substantial productivity gains.
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    Optimal employee turnover rate: theory and evidence
    HARRIS, MARK ; Tang, Kam-Ki ; TSENG, YI-PING ( 2002-10)
    This paper investigates the quantitative effects of employee turnover on firms' productivity. The Australian Business Longitudinal Survey 1995-98, a unique survey providing firm level data on both production and employee turnover, is used as the data source. Theoretical studies have advocated that firm specific human capital and job matching to be the two major, but competing, mechanisms through which turnover affects productivity. Our results indicate that the effect of job matching dominates when turnover is"low," while the effect of firm specific human capital dominates when turnover is"high." We identify that the optimal turnover rate - the rate that maximises productivity, controlling for other factors - is about 0.3, well in excess of the sample mean. The finding suggests that further increasing the flexibility of employment arrangement for small and medium Australian enterprises could yield substantial productivity gains
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    Dynamic Relationships in the Australian Labour Market: Heterogeneity and State Dependence
    Knights, S. ; Harris, M. N. ; Loundes, J. ( 2000-03)
    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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    The negative inflation-growth effect: theory and evidence
    HARRIS, MN ; GILLMAN, M ; MATYAS, M (Melbourne Institute of Applied Economic and Social Research, 2001)
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    Modelling Export Activity of Eleven APEC Countries
    Matyas, Laszlo ; Konya, Laszlo ; Harris, Mark N. ( 2000-03)
    The gravity model has long been used for modelling and predicting trade flows. This paper generalises the gravity model allowing for proper representation of local and target country effects and also the business cycle. The new approach is based on a panel data framework (instead of a simple cross sectional or time series approach) where the additional information available from using both types of data (ie. cross sectional and time series) is utilised to properly model all the specific effects. The model is applied to a panel of APEC countries.
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    Modelling the Impact of Environmental Regulations on Bilateral Trade Flows: OECD, 1990-96
    Harris, Mark N. ; Konya, Laszlo ; Matyas, Laszlo ( 2000-07)
    Since the early seventies an increasing attention has been paid to the impact environmental policy has on foreign trade. One of the most important issues is whether countries with relatively strict environmental regulations tend to experience a deterioration of international competitiveness and thus a fall in the exports, and a rise in the imports, of the pollution-intensive commodities or, on the other hand, benefit from the improvement in environmental quality and are likely to develop new comparative advantages in the environmentally more sensitive industries. So far, most empirical studies have concluded that the proportion of environmental costs to the total production costs is still so marginal that environmental policies have hardly any effect on comparative advantage patterns and thus on foreign trade. One of the few exceptions is Van Beers and Van den Bergh (1997), who found that stricter regulations have some negative impact on bilateral trade flows between OECD countries. The aim of this paper is to show that this outcome is partly due to model mis-specification. The analysis is based on a triple indexed fixed-effects model and on its variant's. It is found that, as so on as both the importing and exporting country specific effects are taken into consideration, the relationship between stricter regulations and foreign trade becomes statistically insignificant. This suggests that environmental costs do not have a real impact, neither negative nor positive, on foreign trade.
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    A dynamic panel analysis of the profitability of Australian tax entities
    Feeny, S. ; Harris, M. N. ; Loundes, J. ( 2000-11)
    This paper investigates the determinants of profitability of Australian tax entities over the period 1993/94 to 1996/97 for each of 91 three-digit ANZSIC industries. The theoretical model is based on that of Cowling and Waterson (1976). However, it is augmented by the inclusion of lagged profitability to allow for habit persistence in entity profitability. The so-called operational Wansbeek-Bekker estimator is used to control for endogeneity of this lagged dependent variable, whilst simultaneously controlling for observed and unobserved entity heterogeneity. Aggregate results suggest that profitability in the previous year, entity capital intensity, and barriers to entry have the expected positive association with current profitability measured by the price-cost margin. Entity market share-and to a lesser extent concentration-are found to have a U shaped relationship with profitability.
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    Habit Persistence in Effective Tax Rates: Evidence Using Australian Tax Entities
    Harris, Mark N. ; Feeny, Simon ( 2000-09)
    This paper uses administrative data from the Australian Tax Office, to model the effective tax rates (ETRs) of large Australian corporates. The extent to which there is any habit persistence in ETRs is also examined. The results suggest that unobserved entity heterogeneity is important in explaining ETRs. In terms of observed heterogeneity, entity size, level of leverage, capital intensity, foreign income and R&D, are all important explanators of ETRs. There is also evidence of a significant amount of habit persistence, implying that ETRs converge monotonically towards the statutory rate of corporation tax.
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    Simulating the Behavioural Effects of Welfare Reforms Among Sole Parents in Australia
    DUNCAN, ALAN ; Harris, Mark N. ( 2001-06)
    This paper derives and estimates an econometric model of labour supply among sole parents in Australia, using modelling techniques which treat the labour supply decision as a utility maximising choice between a given number of discrete states. In estimation, we control for random preference heterogeneity as well as fixed and search costs. Using our econometric model, we look at the effects of actual and hypothetical welfare policy reforms on the employment choices of sole parents in Australia. The microsimulation results presented in this paper use the Melbourne Institute Tax and Transfer Simulator (MITTS), developed at Melbourne Institute of Applied Economic and Social Research.
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    A Model for Ordered Data with Clustering of Observations
    Fry, Tim R. L. ; Harris, Mark N. ( 2000-01)
    There is no qualitative dependent model that can simultaneously account for data sets in which the variable of interest has both a multi-modal distribution and is potentially ordered. Such a multimodal distribution may be the result of individuals being captive to particular choices. Such a case arises when there is digit preferencing (particular numbers, such as 0, 5 and 101 are often favored in many survey-based data sets). This paper introduces a new discrete choice model, the Digit Ordered Extreme Value (DOGEV), that does account for both ordering and digit preferencing in the data, and applies it to an Australian Inflationary Expectations data set.