Labour Market Models of Unemployment in Australia

Melbourne Institute Working Paper No. 15/00

Date: September 2000


Jeff Borland
Ian McDonald


This paper reviews evidence on the equilibrium rate of unemployment and on causes of unemployment in Australia from empirical modelling of labour market outcomes. Three main types of models are reviewed - Phillips curve models, Multi-equation models; and Beveridge curve models. The paper begins with a simple review of labour market theory in order to provide some motivation for the empirical approaches that are examined. In the main part of the paper the three modelling approaches are reviewed. For each model the estimation methodology is described, main results on causes of unemployment from that approach are summarised, and an evaluation of the model is made.

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