Economics - Research Publications
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ItemLABOR'S SHARE, THE FIRM'S MARKET POWER, AND TOTAL FACTOR PRODUCTIVITY(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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ItemRevisiting the Okun relationship(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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ItemRegional Differences in the Severity of Recessions in the UK(Department of Economics, The University of Melbourne, 2007)
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ItemCommon cycles in labour market separation rates for Australian states( 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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ItemInvestment, profits and employmentin Kalecki & Keynes( 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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ItemUnemployment Rate Dispersion in Melbourne: The Regional Dimension(Department of Economics, The University of Melbourne, 2007)
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ItemModels of labour services andestimates of Total Factor Productivity( 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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ItemUnemployment Rate Dispersion within Australian Cities(Department of Economics, The University of Melbourne, 2007)
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ItemAn employment equation for Australia: 1966-2001( 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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ItemThe incidence of long-term unemployment in Australia 1978-2003( 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.