A DISCUSSION OF THE APPROPRIATE METHOD FOR DECOMPOSING CHANGES OVERTIME IN A WEIGHTED AGGREGATE INTO ITS PROXIMATE DETERMINANTS AND AN APPLICATION TO MALE PARTICIPATION RATE CHANGES

This paper considers the most appropriate technique to be used to decompose moments over time of a weighted average into rate and weight (age) components and also proposes various graphical methods by which we can best present the results of decomposition procedures. The material is illustrated with reference to data on labour market participation by males in Australia over the period 1978 - 2001. The main findings are: First, that changes in the age composition are the main source of change in the (weighted) aggregate participation rate. Second, that it is the downward trend in the participation rate for males in the age group 25-54 which for some 6 or 7 years now has been virtually the only source of a reduced rate component in the aggregate. Changes in participation rates by older males, although quantitatively important prior to 1985, are no longer the main source of change in the aggregate participation rate for males.Male Participation Rate; Labor Force; Australia

Caryle, Malthus and Sismondi: The Origins of Carlyle’s Dismal View of Political Economy

While it is correct to say that Carlyle first applied the exact phrase “dismal science” 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 before that time. Indeed, his negative attitude can be seen quite clearly in his earlier published reactions to the writings of Malthus (and Sismondi, amongst others) on population growth and its consequences and also to the perceived ‘materialistic’ nature of the subject matter of political economy.

Investment, Profits and Employment in Kalecki & Keynes

This paper sets out my response to the articles by Paul Davidson in the Journal of Post Keynesian Economics in 2000 and 2002 dealing with the (supposed) superiority of Keynes’s explanation of the “ultimate cause” of unemployment over that of Kalecki. I show that there are a number of serious errors in Davidson’s explanation of Kalecki’s theories. I also argue that we would have less of this sort of nonsense if ‘post keynesians’ like Davidson were to recognize that, for Keynes as for Kalecki, aggregate demand shocks are profit shocks. In the final section of the paper I explain why it is that I none-the-less agree most emphatically with Davidson when he says that Kalecki and Keynes had quite different ideas on the ‘causes’ or ‘origins’ of (involuntary) unemployment in a capitalist economy.

Common Cycles in Labour Market Separation Rates for Australian States

There is a considerable body of evidence showing that it is the inflow into unemployment that drives the unemployment rate up and down and so from a policy point of view an important question is whether or not movements in state inflow reflect the impact of state-specific shocks or common shocks affecting the entire economy This paper reports the results of using principal components analysis to search for a common cycle in time series data for the rate at which people are leaving employment and moving to unemployment in the six states of Australia. It is concluded that there is a common cyclical component to each of the state’s separation rates but that it accounts for only a small part of the total variation we observe in the data set. In addition there are large idiosyncratic variations especially in the case of three of the six states. These findings strengthen the case for regional labour market policy in Australia.Unemployment; Cycles; Principal components analysis; Australia

Unemployment Rate Dispersion in Melbourne: The Regional Dimension

In this paper we examine unemployment rate dispersion across the (statistical) regions in the Melbourne metropolitan area. We find that the level of dispersion is positively correlated with the unemployment rate in all the regions taken together and that the ‘elasticity’ of dispersion with respect to the unemployment rate is unity, with the result that there is a tendency for the level of dispersion relative to the average unemployment rate to remain stationary over our sample period. We discuss the implications of this and show that the unemployment rate differences are persistent in the sense that the same areas exhibit relatively high (or low) unemployment rates over the whole of our sample period. We also estimate equilibrium rates of unemployment for the different regions in Melbourne and conjecture possible explanations for the differences in the level and in the persistence of the equilibrium rates.Regional Unemployment Disparities Business Cycle Unemployment

Models of Labour Services and Estimates of Total Factor Productivity

This paper examines the manner in which labour services are modelled in the aggregate production function, concentrating on the relationship between numbers employed and average hours worked. It argues that numbers employed and hours worked are not perfect substitutes and that conventional estimates of total factor productivity which, by using total hours worked as the measure of labour services, assume they are perfect substitutes, will be biased when there are marked changes in average hours worked. The relevance of the theoretical argument is illustrated using data for the United States and the United Kingdom.Labour Services, Production Function, Total Factor Productivity

Survival on the Titantic: Illustrating Wald and LM Tests for Proportions and Logits

Students are very interested in lecture examples and class exercises involving 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 relationships between various tests for differences in survival rates between different groups of passengers. Among the concepts examined are tests for differences of proportions using a normal distribution, a chi-square test for independence, a test for the equality of two logits and a test for the significance of the coefficient of a binary variable in logit 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 purposes and one to be given as an exercise to students.Contingency table, Difference in proportions, Logit model, Statistical tests

The Incidence of Long-Term Unemployment in Australia 1978-2003

This paper explores the following question - Has there been any long-run increase (or decrease) in the ‘incidence’ of long-term unemployment once we have corrected for cyclical factors? Our research leads us to conclude: (i) that the incidence of male long-term unemployment 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 to unemployment as well as employment) and an increasing incidence of long-term unemployment. Experimenting with policy dummies, we find no evidence of policy effects on the incidence of long-term unemployment in the case of males and females but there is some evidence that policy had temporary effects on females.Unemployment Business Cycle