Melbourne Institute of Applied Economic and Social Research - Research Publications
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ItemConflict inflation: estimating the contributions to wage inflation in Australia during the 1990s.( 2003-03)One of the major emerging macroeconomic problems during the century has been the tendency for inflation to accelerate under prolonged periods of full employment. According to Isaac (1977) and Kaldor (1996, 5th Lecture), this arises from the process of wage determination common to most western economics. They argue that there are three major objectives of wage earners that are in competition with one another. First, the desire to maintain relativities; secondly, the desire to have a 'fair' share of companies profits; and thirdly, a reluctance to allow any encroachment on achieved standards due to unfavourable (exogenous) events. If companies have differing rates of profit then the first objective will conflict with the second. If there are adverse changes the terms of trade, then the third objective will cause inflation. This paper tests how well the three objectives of wage earners cited above in the context of their power to effect these objectives, explains wage inflation in Australia using a times series of micro wage rate rates for detailed occupations and industries for the period 1989 to 2000. We find that wages are sensitive to the three major objectives, but not occupational unemployment rates.
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ItemBaynesian evidence on the structure of unemployment( 2003-02)This paper presents a Bayesian assessment of the likelihood of unit roots in the unemployment rates of 16 OECD countries. Bayesian techniques for detecting multiple structural breaks in time series have recently been developed by Wang and Zivot (2000). I apply these tests to a data set recently analyzed by Papell et al (2000). I also treat the number of structural breaks as an additional parameter to be estimated. I find virtually no support for unit root hysteresis in OECD unemployment rates, this result is very robust to the choice of prior
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ItemEstimation of wage equations in Australia: allowing for censored observations of labour supply( 2002-05)This paper presents results for five separately estimated sets of participation and wage equations. The Australian working-age population is divided into sole parents, single men, single women, married men and married women. The approach in this paper takes the censoring of labour supply observations at 50 hours per week into account. The results for the wage equations are as anticipated with education, work experience and age increasing the expected wage. As expected, allowing for the censoring of labour supply reduces the predicted wage levels, particularly for married men who are most likely to work 50 hours or more.