Melbourne Institute of Applied Economic and Social Research - Theses
Now showing items 1-12 of 12
The Dynamics of Self-Employment in Australia and the Role of the Solo Self-Employed
A common belief held by policymakers is that the self-employed are a vital element of well-functioning economies. They promote economic growth, technological innovation and job creation. Yet, descriptive evidence across multiple industrialised economies concludes that relatively few self-employed workers create any jobs. Most self-employed workers do not hire any employees and are known as the solo self-employed. Not much is established about the role the solo self-employed have in job creation: Do they act as a more flexible form of employment and/or is solo self-employment a stepping-stone to job creation as an employer? This thesis aims to investigate the dynamics of self-employment in Australia. It uses individual-level data from the Household, Income and Labour Dynamic in Australia (HILDA) Survey from 2001 to 2016, where initial statistics support the notion of the solo self-employment stepping-stone effect. The statistics also show a declining trend in employership and solo self-employment rates and that, at most, half of the employers survive past their initial year in employership. I consider three key questions regarding the Australian self-employed. The first explores the idea of solo self-employment being used as a device to reveal one’s own ability to be self-employed. If true, then being solo self-employed increases the individual’s probability of becoming an employer, more so than any other employment state. This assertion is empirically tested, and the results suggest that it is true. However, the results also suggest the difference, while significant, is minor when compared to the observable rates of transitions into employership. The second question investigates what the skill-based determinants of employership survival are. It is possible that high rates of employership exits are because of a mismatch between employership skill requirements and individual expectations. Using survival analysis techniques, I find experience in occupations that treat cognitive, resource management or pattern recognition skills as important determinants of employership survival. The third question examines if the declining rates of Australian self-employment represent labour market failures: are there barriers hindering entry into self-employment? I find employers and solo self-employed workers have significantly higher job satisfaction scores than wage/salary employees. I treat this as evidence for self-employment entry barriers as they should be similarly satisfied in a labour market with free entry.
Challenges in early adulthood and the timing of nest-leaving
Recent young adult cohorts have delayed moving out from the parental home, reflecting social trends and macroeconomic conditions that undermine the affordability of independent living. This dissertation focuses on the timing of these nest-leaving transitions in relation to other significant decisions and events in early adulthood. Each of the three chapters investigates whether potentially adverse outcomes lead to earlier nest-leaving, which has been shown to be financially harrowing and disadvantaging. To address these research questions, I utilize longitudinal data from the Household Income and Labour Dynamics in Australia (HILDA) survey. Methodologically, I extensively apply event history models and focus on effects on the timing of nest-leaving events. I address potential endogeneity between the nest-leaving decision and other choices in early adulthood by estimating these simultaneously, accounting for selection effects through random effects models. The first essay considers how heavy drinking and cigarette smoking affect the timing of leaving home. As risky health behaviors, I find evidence that young adults who drink heavily leave home sooner than moderate or non-drinking counterparts. Among women, early initiation of alcohol or tobacco use by age 15 further compounds nest-leaving risks, showing that substance usage is far more consequential for their co-residence with parents. The second essay investigates human capital investment in tertiary education, to determine if graduation or dropout rates disfavor students who move out and maintain their own independent household. This chapter also considers whether parents condition their offer of co-residence on the young adult's enrollment. The results indicate that men clearly benefit while co-residing, as they graduate sooner than counterparts who live independently. However, women do not significantly benefit from co-residence in this way, and instead tend to move out around the time of graduation. The third essay examines the pathways out from the parental home -- either with or without a partner -- and how these may be affected by negative life events. Sudden illness or injury of the young adult or a family member, the death of a close friend or a relative, and victimization to violent or property crimes are unforeseeable events that can compromise the young adult's ability to navigate key transitions in adulthood. Results suggest that men are more likely to remain at home longer after a family member is in ill health, whereas women are more likely to leave home soon after the death of a close friend or experiences of property crime. The findings across these essays consistently emphasize women's short-lived co-residence with parents, surfacing from disaggregated analyses by gender. Several factors which contribute to earlier nest-leaving are themselves disadvantaging in nature, and thus raise a concern that negative experiences early in adulthood could beget further hardships later on. This dissertation contributes to the nest-leaving literature by highlighting potential precursors of disadvantage, even while the young adult co-resides and receives in-kind parental transfers.
Achievement gains from attendance at selective high schools
Academically selective high schools are a polarizing topic in education policy, despite only having a small presence in some Australian states. They appear successful. The schools regularly top annual school rankings of university entrance results, but this is perhaps unsurprising given that their students are admitted based on their performances on an entrance exam. This thesis asks whether selective high schools improve their students’ university entrance results beyond what they would have achieved otherwise. The main chapter is a case study from an anonymized Australian state that follows high-achievement students through high school. The key challenge is finding a group of non-selective students comparable to those who attend selective schools. For additional background, the thesis explored the following themes: the historical development of selective high schools, the premise that the schools cater to gifted and talented students, and the high levels of demand for the schools within current trends in educational policy. The thesis provides the first estimates of the selective school effect (roughly contemporaneous with Zen 2016) from matching and regression discontinuity approaches in the Australian context, which are improved statistical methods compared with that of previous research (e.g. regression analyses from Lu and Rickard, 2014). The estimates point to small positive effects at best on university entrance results from attending the selective schools. Overall, the small selective school effect appears to reflect the high levels of educational aspiration of both selective students as well as applicants who attended other schools. Both groups of students appear to be among the most driven and motivated, being disproportionately from immigrant and socio-economically advantaged backgrounds and having implicitly signaled an aspirational intent by applying to the schools. Lastly, the thesis expands on one aspect of the selective schools, whereby many of their students experience a decrease in within-school achievement ranks from attending a school with high-achievement peers. In a more general context, the thesis assesses the effect from changes in local ranks on later achievement for students who transitioned from primary to secondary school. The results indicate that perceived increases in local rank have a negative effect on standardized test scores, suggesting that students reduced their allocation of effort in response to random increases in rank. The new empirical evidence from the thesis supports the view that selective schools represent a positive achievement ideal for their students. Recent public policy discourse on the selective schools has included calls for expansion of the system to the primary school level in one state, and criticisms of a hyper-competitive culture at the schools, including suggestions of unfair entry due to excessive tutoring on the part of applicants. The research positively contributes to the discourse by providing historical context, identifying the relevant issues and articulating the potential indirect consequences of these policies.
Supply capacity and waiting times in primary care
Achieving timely access to primary care has become a central challenge for health systems around the world. However, there is very limited understanding of how supply capacity of primary health care providers and supply-side policy interventions affect how long patients have to wait for receiving primary care. This thesis provides new empirical evidence on the impact of GPs, nurses and incentive schemes on waiting times in primary care. In doing so it makes an important contribution to the waiting time literature and provides vital evidence for primary care policy development and workforce planning.
Essays on employment outcomes, homelessness and informal survival activities
This thesis contains three independent chapters that draw on and contribute to the literature on economic and social disadvantages and labour economics. Using three independent essays, I focus on three issues related to non-standard employment; employment in a non-standard setting, i.e. employment among homeless people; and non-standard methods of acquiring financial resources. Specifically, the first essay analyses the effect of non-permanent contractual employment on financial hardship, the second essay studies how the experience of homelessness affects employment entry and exit, and the third essay examines the circumstances influencing the informal survival activities used by disadvantaged populations.
The economics of education: student achievement and school effectiveness
This thesis examines three important aspects of the contribution made by schools to individual student achievement. Mixed evidence exists in the literature on school effects on student achievement, with early research finding little or no effect. Using a unique administrative dataset, we estimate school value-added effects, highlighting shortcomings in existing models. Allowing for heterogeneity, we find evidence of differential school effects by student ability. Our preferred measurement-error corrected model finds effective schools can achieve as much as one-quarter of a year’s progress more in a single year compared to ineffective schools. Contrasting results characterize research into the effectiveness of school resources in improving student achievement. Recent findings of substantial principal and teacher effects increasingly suggest that what matters is how school resources are managed and spent, rather than their level. The Smarter Schools National Partnership provided $2.5 billion in funding to disadvantaged schools with the spending decisions left largely up to schools within broadly defined goals. Achievement growth increased in schools that received the additional resources. The program was found to have had the greatest effect on growth in cognitive skills for secondary school students compared to primary school students. Employing a unique administrative panel data set from the Victorian public school system - known for the degree of autonomy held by its principals - we construct estimates of the idiosyncratic effects of principals on student achievement. We do so using fixed effects techniques and turnover of principals across schools to isolate the effect of principals from the effect of schools themselves. More importantly, through detailed staff and parent surveys, we investigate potential mechanisms through which individual principals may affect student outcomes. Our results suggest that a primary pathway is through establishing a coherent set of goals for a school, and through increasing professional interaction amongst staff.
Policy coordination among the ASEAN-5: an empirical investigation
The ASEAN-5 economies are pursuing the possibility of exchange rate and monetary policy coordination after having experienced significant spillovers during the Asian Financial Crisis (AFC) that were facilitated by their trade and financial linkages. To do so however, would require ceding national interests and could be costly depending on how often this occurs. According to the optimum currency area (OCA) literature this cost will be significantly reduced if the economies experience common and symmetric shocks. The aim of this thesis is to empirically examine whether exchange rate and monetary policy coordination is feasible among the ASEAN-5 economies based on this OCA criterion, accounting for the existing trade and financial linkages among them. First, the analysis shows that policy coordination may be needed to manage potential shock spillovers through the market linkages that are present among the ASEAN-5 economies. Significant linkages in their capital, goods and to some extent their labour markets as well, were found. While these linkages are not specifically identified as the primary channels, the transmission of the adverse shock in both the average and volatility of returns during the AFC was found to be due to the strength of the existing economic interdependence, which is facilitated by market linkages. These results suggest that policy coordination may be needed to manage the spillovers that occur among these five economies. Second, the analysis determines if the ASEAN-5 economies experience common and symmetric shocks. Supply and demand shocks are decomposed from domestic output, with the addition of price information to fully identify these shocks; demand shocks are restricted such that they do not have permanent effects on output while supply shocks do. The supply and demand shock correlations across pairs of countries are then examined. Given that only a few country pairs had correlated shocks, the degree of shock symmetry is low. However, the degree of shock symmetry increased in the post-AFC period. The analysis also isolated a common factor among the ASEAN-5's output variables; each of the economies was positively correlated with this common factor. The common factor identified was found to be best explained by four global variables: US interest rates, US output, China's output, and oil prices. Shocks to each of these global variables yielded common shocks for all the ASEAN-5 economies. Third, the ASEAN-5 economies are modelled to incorporate the existing trade and financial linkages in a global model in order to determine if they experience symmetric responses to each of the four common shocks identified previously. This is done using a Global VAR model. Output responses for the ASEAN-5 economies were found to be symmetric for all four global shocks explored. Market linkages identified previously underpin this result; trade, financial and labour linkages are present in the form of intra-industry trade flows from product fragmentation, portfolio investments and migrant remittances, respectively. The three economic characteristics of a regional production network, oil reliance and domestic consumption helped to explain the responses observed in domestic variables for the ASEAN-5 economies, more generally. Overall, the results in this thesis point to common and symmetric shocks among the ASEAN-5 economies and therefore, suggest that exchange rate and monetary policy coordination should be feasible for the group.
Location choice of general practitioners: exploring supply, mobility, and equity in Australia
This thesis examines the location choices and resultant distribution of general practitioners (GPs) in Australia. Specifically, horizontal equity in the distribution of GPs is examined and measured. Results suggest a moderate level of inequity across Divisions of General Practice exists. Aggregate non-pecuniary factors associated with areas of high GP concentrations are also explored. GPs appear to be located in accordance with demand, but not necessarily in areas with the highest perceived need for care. Areas with high concentrations of GPs tend to have higher socioeconomic status and be more metropolitan. High GP concentrations are also found in areas with more amenities such as hospitals and private schools. The geographical unit of measurement influences the interpretation of results, but not the robustness of results. Many independent variables are spatially correlated, with GPs located in the vicinity of private schools and in areas where there is an aggregate clustering of higher socioeconomic status and metropolitan neighbourhoods. GPs are however, located in direct proximity to hospitals and several population characteristics associated with demand. Using longitudinal data from the Medicine in Australian Balancing Employment and Life (MABEL) survey metropolitan GPs’ decision to locate in areas with low, medium, or high socioeconomic status as well as their decisions to re-locate are analysed. The results demonstrate that practice-owning and employee GPs consider factors beyond simple profit maximization when making location choices. Nonetheless, practice-owning and employee GPs place different weights on the importance of patient volume, complexity, GP density in the neighbourhood, and expected earnings. GPs tend to relocate towards neighbourhoods with similar or higher socioeconomic status, with very few GPs choosing to relocate to neighbourhoods with low socioeconomic status. Policy simulations suggest that GPs, particularly practice owning GPs, are not very responsive to pecuniary relocation incentives once an initial location decision has been made.
Quality-adjusted efficiency measures for public hospitals
Public hospital expenditures are a major cause of rising healthcare costs. Many remedies have been proposed, but a widespread concern is that some of these ideas may lower quality of care. In the literature there are many studies that discuss this very issue, but considerably less attention has been devoted to the way hospital quality should be estimated. This is important because inaccurate estimates of hospital quality may distort results for empirical studies that incorporate quality in the analysis. This thesis contributes to the literature on estimating hospital quality by focusing on three specific cases. The first part pertains to the use of the standardised incidence ratio (SIR), commonly used in health economics as a risk-adjusted measure of performance. Existing analytical methods tend to capture the statistical dispersion of the SIR in simplistic ways. Bootstrapping or simulations are obvious answers, but they tend to be overly time-consuming. This thesis adopts a number of analytical approximations from medicine and applied statistics, and compares their performance against each other as well as the bootstrapped results. The main findings highlight the importance of recognising the stochastic element in the SIR; methods that explicitly account for this produce more accurate confidence intervals than those that did not do so. The second part of this study investigates the significance of how hospital quality is defined and incorporated into empirical studies. Two issues relating to hospital quality are examined: the stochastic nature of quality statistics, and the multifaceted nature of quality of care. The first issue is tackled using bootstrap regression, adjusting for the distribution of the quality statistic as measured by the SIR. It is found that with bootstrapping, the statistical significance of the quality parameter increased noticeably. The second issue is addressed by introducing a second quality measure into the production function. Results for the two measures were significantly different, highlighting the importance of carefully defining hospital quality. Part three of the thesis examines the implications of disease aggregation, a little discussed issue in the literature. This study investigates the importance of disease aggregation via an empirical investigation of the relationship between hospital quality and efficiency. Results indicate an overall inverse relationship, but the magnitude and policy implications change significantly as disease aggregation becomes more refined.
The utilisation of human capital from education in Australian labour markets: over-education?
Modern societies devote considerable resources to the education of individuals. This represents an investment for individuals and societies. Since many of the benefits are realised via the employment of individuals, labour markets are critical for the accrual of benefits to such investments in education. Labour market failures, therefore, can adversely affect the benefits that accrue to individuals and societies. In particular, their failure to facilitate the full utilisation of the human capital individuals derive from education—a phenomenon referred to as over-education—would diminish such benefits. For societies, over-education implies an under-utilisation of human capital available in the workforce, leading to productivity levels, economic growth rates and living standards below their potential. Meanwhile, over-educated individuals would not receive the full benefits to their investments, at least in terms of increased earnings. This study aims to investigate the existence of over-education in Australian labour markets. It uses individual-level data from the Household, Income and Labour Dynamics in Australia (HILDA) Survey for the 2001 to 2008 period, where initial results indicate roughly 20 per cent of working-age employees are over-educated in each year. The study considers three key questions regarding over-education. The first concerns its identification and subsequent assertion that individuals deemed over-educated have human capital from education that is under-utilised in their current job. This pivotal assertion is empirically tested. The results indicate those identified as over-educated do indeed have under-utilised human capital. The second question concerns the dynamics of over-education. In particular, the possibility that over-education is a result of the inherently dynamic nature of labour markets, whereby it may be merely short-term disequilibria with no enduring effects. While it is predominantly a temporary state, a significant proportion of affected individuals are found to be persistently over-educated. It is also found to have detrimental effects that endure beyond individuals’ exits from the state; specifically, evidence indicates over-education can lead to human capital depreciation. Over-education, therefore, is not merely a by-product of adjustment processes in dynamic and well-functioning labour markets. The third question concerns the possibility not all over-education represents labour market failures. In particular, since many job attributes, not just the wage, can affect individuals’ utility levels, some over-educated individuals may have obtained jobs that maximise their (expected) utility levels and, therefore, achieved their preferred outcome. Thus, individuals may trade wages for non-pecuniary benefits or improved working conditions and, thereby, accept jobs for which they are over-educated. The results indicate roughly one-third of over-educated individuals are actually voluntarily over-educated. They are found to trade wages for increased job security, preferred hours, greater job flexibility and reduced stress. And, overall, they are more satisfied with their achieved work-life balance.
The retirement decisions of mature age Australians
In Australia, as in most OECD countries, an aging population has given rise to concerns about whether, in the future, there will be enough people in the workforce to support the growing proportion of the population who have retired. A key policy issue for the Australian Government is how to increase mature age labour force participation. Understanding how retirement decisions are made is crucial to achieving this aim. The research in this thesis provides insights into the main factors associated with decisions about when, and how, mature age Australians move from work to retirement. In the first chapter, Australian and international research on retirement decisions is reviewed. The chapter highlights the strengths and limitations of economic models used to analyse these decisions. Also described is the main data source used for the thesis, the Household, Income and Labour Dynamics Australia (HILDA) Survey. Chapter 2 describes the current retirement system in Australia, and provides a summary of the recent reform initiatives designed to increase mature age labour force participation. In Chapter 3, binary response models are used to evaluate the impact of the financial incentives available to mature age Australians who are deciding whether to retire or continue in paid employment. The results suggest that for many men, and also for single women, the Australian retirement system does create financial incentives to retire early, and that many actually respond to these incentives. Building on these models, simulations are undertaken to assess the likely effects of policy changes recently introduced or announced by the Australian Government. These simulations indicate that increasing Age Pension eligibility age by two years will provide a relatively small incentive to remain in employment. However, the ‘Simpler Super’ reforms introduced in 2007 may create an incentive to retire early. Chapter 4 highlights the importance of taking into account the family decision-making context when modeling the retirement decisions of partnered men and women. Two complementary estimation approaches are used to model the retirement decisions of couples. First, a single risk duration model provides insights into the influences of a spouse’s characteristics on the retirement decision of his or her partner. In the second approach, a competing-risks framework is used to examine the joint retirement behaviour of couples exiting employment. The results provide evidence of coordination of retirement among mature age couples, largely due to complementarities in leisure and, for women, because of caring responsibilities. In Chapter 5 the retirement transitions of mature age men and women are modeled using standard and dynamic multinomial logit models. The results confirm that age, health and human capital are important determinants of retirement behaviour and provide further evidence of coordinated retirement by mature age couples. Accounting for unobserved heterogeneity confirms the existence of both true state dependence and spurious state dependence in the labour force decisions of mature age men and women. Therefore, there are likely to be considerable benefits from policies that discourage mature age individuals from leaving the labour force.
Geographic inequality: neighbourhood externalities and education expectations
This thesis examines the role of neighbourhood in youths' education. Estimates are provided of the statistical significance and the quantitative importance of neighbourhood characteristics in the education expectations of youths in Metropolitan Melbourne, Australia. Extensive analysis of variability of estimates containing distinct neighbourhood measures offers a rationale for inconsistent findings in previous research of the influence of neighbourhoods. Over 1200 secondary school students were surveyed for this analysis. Data was obtained concerning students' education expectations, and their personal and family characteristics such as education and employment histories. This data was combined with Census data identifying various neighbourhood characteristics. Estimations of youths' education expectations yielded a statistically significant and quantitatively important role of neighbourhoods. Various statistical techniques are utilised to quantify the role of neighbourhoods and limit problems of misspecification that have plagued literature analysing the influence of neighbourhoods. Misspecification tests show that neighbourhood characteristics ‘proximate’ to the dependent variable of education expectations provide more consistent estimates of the influence of neighbourhoods. Monte carlo experiments identify the role of omitted variable bias in estimating youths' education expectations. It is asserted that variations in findings across various neighbourhood characteristics may explain some of the variation in previous research of the influence of neighbourhoods. The interactions of school quality and neighbourhood characteristics are also explored. Estimations including distinct measures of a youths' neighbourhood show that estimations including particular neighbourhood characteristics are more susceptible to misspecification, particularly considering variation in school quality. The quantitative importance of various influences of youths' education expectations is discussed. The importance of individual characteristics such as gender, various family characteristics, and the impact of school sector are also analysed. Findings of the importance of neighbourhoods that can promote and retard the educational investments of youths could have severe impact upon inequality in Metropolitan Melbourne.