Economics - Research Publications

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    LABOR'S SHARE, THE FIRM'S MARKET POWER, AND TOTAL FACTOR PRODUCTIVITY
    Dixon, R ; Lim, GC (WILEY, 2018-10)
    We investigate the relationship between labor's share, firm's market power, and the elasticity of output with respect to labor input using an approach based on an unobserved components model. The approach yields time‐varying estimates of market power and the elasticity. Evidence on the market power of firms (which we find to be rising since 2000) gives a deeper understanding of movements in labor's share and the labor wedge. The generated values of the elasticity yield revised estimates of total factor productivity growth which is informative about the extent of the downward bias inherent in traditional estimates which use labor's share as a proxy for the elasticity. (JEL O47, C32, E25)
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    Revisiting the Okun relationship
    DIXON, R ; Lim, G ; van Ours, JC (Taylor & Francis, 2017)
    Our article revisits the Okun relationship between observed unemployment rates and output gaps. We include in the relationship the effect of labour market institutions as well as age and gender effects. Our empirical analysis is based on 20 OECD countries over the period 1985–2013. We find that the share of temporary workers (which includes a high and rising share of young workers) played a crucial role in explaining changes in the Okun coefficient (the impact of the output gap on the unemployment rate) over time. The Okun coefficient is not only different for young, prime-age and older workers but also it decreases with age. From a policy perspective, it follows that an increase in economic growth will not only have the desired outcome of reducing the overall unemployment rate but it will also have the distributional effect of lowering youth unemployment.
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    An employment equation for Australia: 1966-2001
    DIXON, ROBERT ; Freebairn, John ; Lim, G. C. ( 2004-01)
    We model the relationship between hours of work and employment and argue thatunless actual hours are varying with a change in ‘standard hours’, actual hours shouldnot appear in the long-run component of an equation for employment. If howeverstandard hours are changing then it is desirable that this variable be incorporated intothe employment equation. Our theoretical model yields an expression for the elasticityof employment with respect to standard hours which shows that the elasticity isrelated to the size of the premium for overtime. Using quarterly data for the period1966:3 – 2001:3 we estimate a new employment equation for Australia incorporatingstandard hours of work. We find empirical support for our approach and we providenew estimates of the elasticity of employment with respect to the real wage and GDP.We also find a marked asymmetry in the response of employment to variations in realGDP and real wages in recession periods as against non-recession periods.
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    The incidence of long-term unemployment in Australia 1978-2003
    DIXON, ROBERT ; Lim, G. C. ( 2004-05)
    This paper explores the following question - Has there been any long-run increase (ordecrease) in the ‘incidence’ of long-term unemployment once we have corrected for cyclicalfactors? Our research leads us to conclude: (i) that the incidence of male long-termunemployment has been neither rising nor falling, once we allow for ‘cyclical factors’ and,(ii) that the incidence of female long-term unemployment has been rising, once we allow for‘cyclical factors’. We conjecture that there is a link between increasing female participation(which we take to be a proxy for ‘attachment to the labour market’ – and thus attachment tounemployment as well as employment) and an increasing incidence of long-termunemployment. Experimenting with policy dummies, we find no evidence of policy effects onthe incidence of long-term unemployment in the case of males and females but there is someevidence that policy had temporary effects on females.
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    A framework for understanding changes in the unemployment rate in a flows context: an examination net flows in the Australian labour market
    DIXON, ROBERT ; Freebairn, John ; Lim, G. C. ( 2004-08)
    In this paper we develop a framework which is appropriate for the systematic investigation ofthe relationship between net (and gross) flows between different labour market states andmovements in the unemployment rate. We use that framework to investigate the behaviour ofnet flows of persons between employment, unemployment and not in the labour force inAustralia between 1979-2003 and the relationship of these flows to changes in theunemployment rate over that period. We find that: flows from unemployment to employmentexceed flows from employment to unemployment and that this is the case even in recessions;flows from employment to not in the labour force exceed flows from not in the labour force toemployment and that this is the case even in booms, and; flows from not in the labour force tounemployment exceed flows from unemployment to not in the labour force even inrecessions. Another important finding is that the reason why the participation rate isnegatively correlated with the unemployment rate is because net flows from employment toboth unemployment and to not in the labour force are highly correlated. It cannot be explainedby flows occurring between unemployment and not in the labour force.
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    Phillips Curve and the Equilibrium Unemployment Rate*
    LIM, GC ; DIXON, R ; TSIAPLIAS, S (Wiley, 2009-12)
    A time‐varying Phillips Curve was estimated as a means to examine the changing nature of the relationship between wage inflation and the unemployment rate in Australia. The implied time‐varying equilibrium unemployment rate was generated and the analysis showed the important role played by variations in the slope of the Phillips Curve in changing the equilibrium unemployment rate. The deviations of actual unemployment rates from the estimated equilibrium unemployment rates also performed remarkably well as measures of inflationary pressure.
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    An employment equation for Australia
    Dixon, R ; Freebairn, J ; Lim, GC (ECONOMIC SOC OF AUSTRALIA BROWN PRIOR ANDERSON PTY LTD, 2005-09)
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