An analysis of unemployment : Australia, 1964-73

The objective of this thesis is to analyse the nature of unemployment in the Australian labour market, particularly that unemployment remaining when the economy is at or near full employment. The key concepts and definitions embodied in the method of approach to the study of unemployment are outlined in chapter 1. Since the late 1950's there has been continued growth in the literature relating to the study of unemployment other than demand-deficient unemployment. A review of this literature, presented in chapter 2, resulted in a decision to base the analysis of unemployment largely on the unemployment-vacancy relationship and the use thereof in estimating the level of non demand-deficient unemployment. Chapter 3 presents the analytical framework for the analysis of unemployment and includes an outline of the aggregate labour market, testing of the unemployment-vacancy relationship, the relationship between flows in the labour market and unemployment and unfilled vacancies, aggregate supply and demand factors and testing the sectoral determinants of non demand-deficient unemployment. To undertake the analysis of unemployment and testing of relationships outlined in chapter 3, data are required for the following : unemployment and unfilled vacancies, supply and demand variables, unemployment and vacancy flows, labour turnover, sectoral unemployment and unfilled vacancies. Data requirements and availability for the period 1964-73 are considered in chapter 4. Preliminary observations indicated that changes in the position of the aggregate unemployment-vacancy relationship and, thus in the level of non demand-deficient unemployment, occurred in 1967 and 1972. The aggregate unemployment-vacancy relationship was estimated and tested for stability in chapter 5. This testing confirmed that two changes in the position of the aggregate unemployment-vacancy relationship took place in the period 1964-73, reflecting firstly a decrease and subsequently an increase in the level of non demand-deficient unemployment. Estimates of non demand-deficient unemployment are presented in chapter 5 and a series on demand-deficient unemployment is derived. Chapter 6 examines the behaviour of the incidence and duration of both unemployment and unfilled vacancies, labour turnover and supply and demand variables. A general increase in the incidence of both unemployment and unfilled vacancies is apparent for the period 1964-73 and this reflects an increase in labour turnover. The testing of supply and demand variables produced unsatisfactory results. A change in the position of the aggregate unemployment-vacancy relationship may be the result of a redistribution of demand between sectors, a change in the relative importance of sectors in the labour force or changes in sectoral unemployment-vacancy relationships. Chapter 7 looks at sectors of the labour force ( age-sex, regions, occupations and industries). The findings indicate that the changes in the aggregate labour market are not uniform throughout the sectors and that a combination of factors is responsible for changes in aggregate non demand-deficient unemployment. A summary of the findings of the analysis together with conclusions that emerge from the study are presented in chapter 8.