Economics - Research Publications

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    Common cycles in labour market separation rates for Australian states
    DIXON, ROBERT ( 2007-04)
    There is a considerable body of evidence showing that it is the inflow intounemployment that drives the unemployment rate up and down and so from a policy point ofview an important question is whether or not movements in state inflow reflect the impact ofstate-specific shocks or common shocks affecting the entire economy This paper reports theresults of using principal components analysis to search for a common cycle in time series datafor the rate at which people are leaving employment and moving to unemployment in the sixstates of Australia. It is concluded that there is a common cyclical component to each of thestate’s separation rates but that it accounts for only a small part of the total variation weobserve in the data set. In addition there are large idiosyncratic variations especially in the caseof three of the six states. These findings strengthen the case for regional labour market policyin Australia.
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    Investment, profits and employmentin Kalecki & Keynes
    DIXON, ROBERT ( 2007-03)
    This paper sets out my response to the articles by Paul Davidson in the Journal of PostKeynesian Economics in 2000 and 2002 dealing with the (supposed) superiority of Keynes’sexplanation of the “ultimate cause” of unemployment over that of Kalecki. I show that thereare a number of serious errors in Davidson’s explanation of Kalecki’s theories. I also arguethat we would have less of this sort of nonsense if ‘post keynesians’ like Davidson were torecognize that, for Keynes as for Kalecki, aggregate demand shocks are profit shocks. In thefinal section of the paper I explain why it is that I none-the-less agree most emphatically withDavidson when he says that Kalecki and Keynes had quite different ideas on the ‘causes’ or‘origins’ of (involuntary) unemployment in a capitalist economy.
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    Models of labour services andestimates of Total Factor Productivity
    DIXON, ROBERT ; SHEPHERD, DAVID ( 2007-01)
    This paper examines the manner in which labour services are modelled in the aggregateproduction function, concentrating on the relationship between numbers employed and averagehours worked. It argues that numbers employed and hours worked are not perfect substitutesand that conventional estimates of total factor productivity which, by using total hours workedas the measure of labour services, assume they are perfect substitutes, will be biased whenthere are marked changes in average hours worked. The relevance of the theoretical argumentis illustrated using data for the United States and the United Kingdom.
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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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    The Cyclical Dynamics and Volatilityof Australian Output and Employment
    DIXON, ROBERT ; SHEPHERD, DAVID ( 2006-07)
    In this paper we examine the volatility of aggregate output and employment in Australia withthe aid of a frequency filtering method (the Butterworth filter) that allows each time series to bedecomposed into trend, cycle and noise components. This analysis is compared with moretraditional methods based simply on the examination of first differences in the logs of the rawdata using cointegration-VAR modelling. We show that the application of univariate AR andbivariate VECM methods to the data results in a detrended series which is dominated by noiserather than cyclical variation and gives break points which are not robust to alternativedecomposition methods. Also, our conclusions challenge accepted wisdom in relation to outputvolatility in Australia which holds that there was a once and for all sustained reduction inoutput volatility in or around 1984. We do not find any convincing evidence for a sustainedreduction in the cyclical volatility of the GDP (or employment) series at that time, but we dofind evidence of a sustained reduction in the cyclical volatility of the GDP (and employment)series in 1993/4. We also find that there is a clear association between output volatility andemployment volatility. We discuss the key features of the business cycle we have identified aswell as some of the policy implications of our results.
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    Survival on the Titantic: Illustrating Waldand LM Tests for Proportions and Logits
    DIXON, ROBERT ; GRIFFITHS, WILLIAM ( 2006-06)
    Students are very interested in lecture examples and class exercisesinvolving data connected to the maiden voyage and the sinking of the liner Titanic.Information on the passengers and their fate can be used to explore relationshipsbetween various tests for differences in survival rates between different groups ofpassengers. Among the concepts examined are tests for differences of proportionsusing a normal distribution, a chi-square test for independence, a test for the equalityof two logits and a test for the significance of the coefficient of a binary variable inlogit model. The relationship between Wald and LM test statistics is also examined.Two related examples are given, one to be used for step by step instructional purposesand one to be given as an exercise to students.
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    Caryle, Malthus and Sismondi: The Origins ofCarlyle’s Dismal View of Political Economy
    DIXON, ROBERT ( 2006-06)
    While it is correct to say that Carlyle first applied the exact phrase “dismalscience” to political economy in his 1849 article on plantation labour in the West Indies,I argue that Carlyle came to the view that political economy was “dismal” well beforethat time. Indeed, his negative attitude can be seen quite clearly in his earlier publishedreactions to the writings of Malthus (and Sismondi, amongst others) on populationgrowth and its consequences and also to the perceived ‘materialistic’ nature of thesubject matter of political economy.