Economics of the Labour Market Economics of the Labour Market Unemployment and the Costs of Unemployment P N (Raja) Junankar Honorary Professor, Industrial Relations Research Centre, UNSW Australia, Emeritus Professor, Western Sydney University and Research Fellow, IZA, Bonn, Germany ECONOMICS OF THE LABOUR MARKET: UNEMPLOYMENT AND THE COSTS OF UNEMPLOYMENT Editorial matter, selection and introduction © P N (Raja) Junankar, 2016 Foreword © G C Harcourt, 2016 Chapter 2.1 © Macmillan Publishers Ltd, 2008; Chapter 2.2 © Macmillan Publishers Ltd, 2008; Chapter 2.3 ©Macmillan Publishers Ltd, 2008; Chapter 2.4 © Macmillan Publishers Ltd, 2008; Chapter 2.5 © Routledge, 2004; Chapter 2.6 © Taylor and Francis, 2003; Chapter 3.1 © Taylor and Francis, 1987; Chapter 3.2 © Palgrave Macmillan Ltd, 1987; Chapter 3.3 © SAGE Publication, 2000; Chapter 3.4 © Australian National University, 1992; Chapter 3.5 ©SAGE Publications, 2015; Chapter 3.6 © Taylor and Francis, 1998; Chapter 4.1 © Oxford University Press, 1981; Chapter 4.2 © The Royal Economic Society, 1984; Chapter 4.3 ©Australian National University, 1991; Chapter 4.4 © John Wiley & Sons, Inc., 1991; Chapter 4.5 © John Wiley & Sons, Inc., 1999; Chapter 4.5 © John Wiley & Sons, Inc., 1999; Chapter 4.6 © Cambridge University Press, 2000; Chapter 4.7 © John Wiley & Sons, Inc., 1985; Chapter 5.1 © National Institute of Labour Studies, 1992; Chapter 5.2 © SAGE Publications, 1998; Chapter 6.1 © Palgrave Macmillan Ltd, 1989; Chapter 6.2 © Economic Planning Advisory Council, 1989; Chapter 6.3 © Oxford University Press, 1991 All rights reserved No reproduction, copy or transmission of this publication may be made without written permission No portion of this publication may be reproduced, copied or transmitted save with written permission In accordance with the provisions of the Copyright, Designs and Patents Act 1988, or under the terms of any licence permitting limited copying issued by the Copyright Licensing Agency, Saffron House, 6–10 Kirby Street, London EC1N 8TS Any person who does any unauthorized act in relation to this publication may be liable to criminal prosecution and civil claims for damages First published 2016 by PALGRAVE MACMILLAN The author has asserted their right to be identified as the author of this work in accordance with the Copyright, Designs and Patents Act 1988 Palgrave Macmillan in the UK is an imprint of Macmillan Publishers Limited, registered in England, company number 785998, of Houndmills, Basingstoke, Hampshire RG21 6XS Palgrave Macmillan in the US is a division of Nature America, Inc., One New York Plaza, Suite 4500 New York, NY 10004–1562 Palgrave Macmillan is the global academic imprint of the above companies and has companies and representatives throughout the world Hardback ISBN: 978–1–137–55518–2 E-PUB ISBN: 978–1–137–55520–5 ISBN 978-1-137-55518-2 ISBN 978-1-137-55519-9 (eBook) DOI 10.1057/9781137555199 Distribution in the UK, Europe and the rest of the world is by Palgrave Macmillan®, a division of Macmillan Publishers Limited, registered in England, company number 785998, of Houndmills, Basingstoke, Hampshire RG21 6XS Library of Congress Cataloging-in-Publication Data Names: Junankar, P N., author Title: Economics of the labour market : unemployment and the costs of unemployment / P N (Raja) Junankar Description: Houndmills, Basingstoke, Hampshire ; New York, NY : Palgrave Macmillan, 2015 | Includes index Identifiers: LCCN 2015033261 | ISBN 978-1-137-55518-2 (hardback) Subjects: LCSH: Labor market | Unemployment Classification: LCC HD5706 J86 2015 | DDC 331.12—dc23 LC record available at http://lccn.loc.gov/2015033261 A catalogue record for this book is available from the Library of Congress A catalogue record for this book is available from the British Library Typeset by MPS Limited, Chennai, India To My wife Susie Junankar, my daughter Kamini and my son Simon Contents List of Figures and Tables ix Foreword by G.C Harcourt xx Preface and Acknowledgements xxi Introduction The 2.1 2.2 2.3 2.4 2.5 2.6 Labour Market Labor Economics Labor Demand Labor Supply Labor Force Participation Employment and Unemployment Estimating the Social Rate of Return to Education for Indigenous Australians 21 23 28 33 38 42 47 Youth Labour Markets 3.1 The British Youth Labour Market in Crisis 3.2 Relative Wages and the Youth Labour Market 3.3 The Youth Labour Market: Anecdotes, Fables and Evidence 3.4 The Dynamics of Youth Unemployment: An Analysis of Recurrent Unemployment 3.5 The Impact of the Global Financial Crisis on Youth Unemployment 3.6 Choosy Youth or Unwanted Youth? A Survey of Unemployment 75 77 102 Unemployment 4.1 An Econometric Analysis of Unemployment in Great Britain, 1952–75 4.2 The Dynamics of Unemployment: Structural Change and Unemployment Flows 4.3 Perspectives on Australian Unemployment: The Impact of Wage Setting Institutions in the 1980s 4.4 Aboriginal Employment and Unemployment: An Overview 4.5 Unemployment in Australia: Models, Myths and Mysteries 4.6 Are Wage Cuts the Answer? Theory and Evidence 4.7 A Political Economy of Unemployment: Causes and Consequences 237 vii 128 152 173 204 239 253 261 293 308 330 346 viii Contents Long-Term Unemployment 5.1 Projections of Long-term Unemployment 5.2 Was Working Nation Working? 359 361 373 Costs of Unemployment 6.1 Unemployment in the European Community: Counting the Costs 6.2 The Costs of Unemployment in Australia 6.3 Unemployment and Mortality in England and Wales: A Preliminary Analysis 391 393 403 Index 474 459 List of Figures and Tables Figures 1.1 Unemployment rates in the OECD (%) 3.1.1 Youth employment: males (percentages) 81 3.1.2 Youth employment: females (percentages) 82 3.1.3 Youth unemployment: males (percentages) 83 3.1.4 Youth unemployment: females (percentages) 84 3.1.5 Youth unemployment: males (thousands) 85 3.1.6 Youth unemployment: females (thousands) 86 3.1.7 Long-term youth unemployment (thousands) 87 3.1.8 Long-term youth unemployment (percentages) 88 3.1.9 Relative labour costs 93 3.1.10 Real earnings 94 3.1.11 Full-time manual employees earnings 96 3.1.12 Non-manual employees earnings 97 3.1.13 Real supplementary benefits 98 3.2.1 Relative labour costs: males 118 3.2.2 Relative labour costs: females 119 3.3.1 “Choices” at critical ages for Youths 130 3.3.2 Manufacturing, 3rd quarter 1986 to 2nd quarter 1997 143 3.3.3 Retail trade, 3rd quarter 1986 to 2nd quarter 1997 145 3.4.1 Duration of completed spells, 1985–88 160 3.4.2 Completed spells of unemployment, 1985–88 161 3.5.1 Unemployment rates, people aged 15–24, 20–24 and 25–64 years Australia, 1978–2014 172 Part-time employment as a share of total employment (%), males aged 15–19 and 20–24 years, Australia 1997–2013 183 Part-time employment as a share of total employment (%), females aged 15–19 and 20–24 years, Australia, 1997–2013 184 3.5.2 3.5.3 ix x List of Figures and Tables 3.5.4 Casual employment as a share of full-time and part-time employment (%), males aged 15–19 and 20–24 years, Australia, 1992–2012 185 3.5.5 Casual employment as a share of full-time and part-time employment (%), females aged 15–19 and 20–24 years, Australia, 1992–2012 186 Unemployment rates (%), males and females aged 15–24 years, Australia, 1978–2012 187 3.5.7 Underemployment rates (%), males and females aged 15–24 years, Australia, 1978–2013 188 3.5.8 Labour underutilisation rates (%), males and females aged 15–24 years, Australia, 1978–2013 189 Youth employment-population ratios, Australia, 1978–2013 189 Labour force participation rates (%), males and females aged 15–24 years, Australia, 1978–2013 190 Incidence of male and female youth long-term unemployment (%), Australia, 1978–2012 190 GDP growth rate (% seasonally adjusted) Australia, 1978–2012 192 Full-time earnings ratios, males aged 15–19 and 20–24 years, Australia, 1990–2012 193 3.5.14 Part-time earnings ratios, males aged 15–19 and 20–24 years, Australia, 1990–2012 194 3.5.15 Full-time earnings ratios, females aged 15–19 and 20–24 years, Australia, 1990–2012 194 Part-time earnings ratios, females aged 15–19 and 20–24 years, Australia, 1990–2012 195 Male youth unemployment rates (%) and the real minimum wage (AUD), Australia, 1998–2013 195 Female youth unemployment rates and the real minimum wage, Australia, 1998–2012 196 Youth unemployment rates and replacement rates, Australia, 1978–2012 197 3.6.1 Unemployment rates by age, Indonesia, 1996 (%) 206 3.6.2 Unemployment rates by education, Indonesia, 1996 (%) 207 3.6.3 Unemployment by age and education, urban males, Indonesia, 1996 (%) 207 3.5.6 3.5.9 3.5.10 3.5.11 3.5.12 3.5.13 3.5.16 3.5.17 3.5.18 3.5.19 List of Figures and Tables xi 3.6.4 Unemployment by age and education, urban females, Indonesia, 1996 (%) 208 3.6.5 Trends in unemployment in Indonesia, 1976–96 (%) 220 3.6.6 Trends in unemployment by education among males and females aged 20–24, urban Indonesia, 1976–96 (%) 224 3.6.7 Trends in unemployment by education among males aged 25–29, urban Indonesia, 1976–94 (%) 225 4.1.1 Forward recursive regression: Cusum squared residuals normalised (LURATE C BENCN LCAPAC LAGCAP ILSET) 243 4.1.2 Forward recursive regression: coefficient on BENCN 244 4.1.3 Forward recursive regression: Cusum squared residuals normalised (LURATE C LRINC LRBEN LCAPAC LAGCAP ILSET) 245 4.1.4 Forward recursive regression: coefficient on LRBEN 246 4.2.1 Actual and fitted unemployment stocks, 1967 (III) to 1980 (II) 259 4.3.1 The aggregate Australian unemployment rate, 1966–89 262 4.3.2 The Accord and unemployment 263 4.3.3 Australian labour force and employment, 1966–89 264 4.3.4 Australian wage inflation, 1967–89 266 4.3.5 Australian real hourly earnings, 1966–89 267 4.3.6 Australian long term unemployment, 1978–89 268 4.3.7 Australian male proportions of the unemployed who were LTU, 1978–89 268 4.3.8 Australian female proportions of the unemployed who were LTU, 1978–89 269 4.4.1 Lewis Model, traditional and modern sectors 295 4.4.2 Full-time employment in the Australian public service (Index numbers: 1973 = 100.0) 301 4.5.1D Unemployment: stocks and flows 4.5.1 311 Male and female full time employment 1979–1998 (1983 = 100) 312 Male and female part time employment 1979–1998 (1983 = 100) 313 4.5.3 Male and female unemployment rates 1979–1998 313 4.5.4a Unemployment rates: with degrees and without post school qualifications 314 Unemployment rates: with and without post school qualifications 315 4.5.2 4.5.4b Index Aaronson, S., 39 Aboriginal employment and unemployment, 293 Aboriginal labour force status, 300 conceptual framework, 294–6 employed Aboriginal people, 298 evidence, 296–302 full-time employment in Australian public service, 300, 301 industries of employment, 300 labour force status of persons, 298 labour market programmes, 302–4 LDCs, 293 level of schooling, 302 Lewis model, 295 and LTU, 301 official unemployment rates, 297 and participation rates, 294 percentage distribution of young unemployed, 302 policies and policy recommendations, 304–5 rates, 299 urban labour market segments, 295 Aboriginal Employment Development Policy (AEDP), 303 ABSTUDY, 53–5 private rate of return to education, 56, 73 Accord, 12, 262, 263, 272–81, 283–6 active labour market policies, 325 Adena, M.A., 152 adverse selection model, 336 Agell, J., 45 aggregate demand, 5–8, 11–13, 25, 43, 44, 92, 99, 103, 106–8, 111, 112, 113, 116, 121, 123, 132, 176, 177, 239, 240, 241, 247, 249, 254, 256, 258, 259, 275, 325, 331, 332, 343, 349, 350, 390, 398, 407, 411 changes in, 132 variables, 247, 254–5 Agrawal, N., 277 Akerlof, G.A., 24, 26, 30, 45, 342, 407 Alexander, J.N., 152 Anderson, P., 54 animal spirits, a priori sample separation, 88, 109, 111, 112, 123, 286 Arndt, H.W., 214, 228 asymmetric information, 3, 23, 175 Atkinson, A.B., 1, 248 Australia, unemployment costs in, 403 alternative estimates of output loss, 437–9, 441 average durations of unemployment, 422 average product method, 431–4 average wage method, 425–31 and benefits, 408–11 congestion costs, 408 costs to government, 439–445 costs to individuals, 409–10 costs to society, 410–11 decomposition of unemployment by duration, 422 discouraged worker effect, 418 efficiency wage, 407 estimated size of hidden unemployment and impact on unemployment rates, 419 estimates of hidden unemployment, 420 estimates of underemployment of labour force, 421 full–time and total unemployment rates, 414 hidden unemployment, 419 incidence of unemployment, 417 individual and social costs, 445–54 jobless rates, 418 jobless ratio, 417 macroeconomic theory, 406 methods of measuring unemployment, 405–6 natural rate, 407 Okun’s law, 434–7 output costs of unemployment, 423–39 474 Index part–time unemployment rates, 415 political business cycle, 405 problems to under-estimation, 424 production possibility boundary, 404 recent trends in, 411–23 secondary workforce, 416 unemployment rate, 414, 415 unemployment series by gender, 412 Australian Bureau of Statistics Survey (ABS Survey), 177 Australian corporatism evidence on determinants of labour supply, 279–81 theoretical issues, 278–9 Australian Council of Trade Unions (ACTU), 262 Australian Industrial Relations Commission (AIRC), 136 Australian labour market, 263 Australian labour force and employment, 264 Australian labour force and job growth and unemployment, 265 Australian real hourly earnings, 267 employment growth, 265, 266 LTU, 267–70 nominal wage inflation, 266–7 real wage levels, 266–7 unrecorded unemployment, 265 Australian unemployment, 261, 308, 310–12 Accord and, 263 costs of unemployment, 327 credentialism inflation, 316 hysteresis, 309, 312 job creation, 320–4 job destruction, 320–4 long term unemployment, 310–12, 319–20 LTU, 281–4 male and female full time employment, 312, 313 male and female unemployment bates, 313 percentage increase in unemployment rates, 315 policies, 324–7 proportion of long term unemployment, 320 quasi corporatist strategy, 317 rates, 314, 315, 317, 318, 319 475 share of manufacturing employment, 316 stocks and flows, 311 technology, trade, labour market flexibility and jobs, 322–4 trend rate estimation, 291–2 UK unemployment rates, 318 underclass, 310 unemployment rates, 261–2 wage-setting institutions and outcomes, 270–5 wage restraint and employment, 275–8 see also econometric analysis of unemployment in Great Britain Australian youth labour markets, 176, 177 ABS Survey, 177–8 casual employment, 185, 186 employment changes by age, 178 female labour force participation rates, 186, 187 female youth unemployment rates, 196 full-time earnings ratios, 193, 194 GDP growth rate, 192 incidence of male and female youth long-term unemployment, 190 labour force participation rates, 190 labour underutilisation rates, 189 male youth unemployment rates, 195 minimum wage, 193 ordinary least squares regression, 179 part-time earnings ratios, 194, 195 part-time employment, 183–4 part-time workers, 180, 183 recession, 191 shares of employment by age and industry, 181–2 unemployment benefits, 193, 196 unemployment rates for adults and young people, 188 youth employment, 180, 189 see also British youth labour market in crisis; Indonesian unemployment AUSTUDY, 53–5 private rate of return to education, 56, 73 average product method, 431 employed labour force, 432 estimates of output loss, 433 total output loss calculation under alternative unemployment scenarios, 436 476 Index average product method – continued total sector-specific output loss calculation from unemployment, 435, 437, 438 average wage method, 425 using average full-time earnings, 427 using average total adult earnings, 427 low and high unemployment scenarios, 433 of output loss calculation, 425 total sector-specific output loss calculation from unemployment, 429, 431, 432 Average Weekly Earnings (AWE), 140, 191 policies, 99–100 real earnings, 93 real supplementary benefits, 98 relative labour costs, 93 state-dependence, 98 wage age profiles, 95 see also Australian youth labour markets; Indonesian unemployment Brown, R.L., 116, 242 Budd, A., 281, 364, 365 budget deficits, 15, 374, 387 Buiter, W.H., 350, 353 business cycle, 5, 10, 322, 373, 376, 419, 420, 425 baby-boom effect, 280–1 Bacon, R., 246 Baker, D., 176 Barr, Nicholas, 108 Barro, R.J., 332 Beavis, A., 176 Becker, G., 4, 25, 35 Becker, G.S., 49, 406, 452, 453 Belchamber, G., 176, 341 benefit-income ratio, 244 Bentham, Berry, A., 205 Bewley, T.F., 13, 326, 342 Bhatia, K., 54 Blackaby, 246 Blanchard, O., 30 Blau, F., 39 Boediono, 214 Booth, A., 175 Borjas, G.J., 152 Borland, J., 316 Bowers, J.K., 240 Bradbury, B., 445, 447 Braithwaite, J., 453 Brechling, 108 Brenner, H., 459, 461 British youth labour market in crisis, 77–8 cross-sectional studies, 94, 98–9 duration of unemployment, 89–91 explanation, 88, 92–3 full-time manual employees earnings, 96 growth of youth unemployment, 79–88 high turnover, 78–9 non-manual employees earnings, 97 non-Walrasian market, 92 Calmfors and Driffill (C-D analysis), 270–2 Calmfors, L., 270, 341, 375 capacity utilisation, 254, 256, 258, 398 Card, D., 26, 175 Cass, B., 303 Cassa Integrazione Guadagni (CIG), 399 casual employment, 183, 185–6 observations, 141 part-time workers, 30, 132 work, workers, 12, 191, 316 centralisation, 341–2 Challen, D., 277 changes in Indonesian unemployment, 219 longer-term trends, 222–7 recent trends, 219–22 Chapman, B.J., 261, 273, 275, 304, 319, 339, 361, 366, 374, 378, 419, 442, 453 Cheshire, P.C., 240 Chow tests, 240, 256 Clark, B., 174, 191 Clark, D.H., 214 Clark, K.B., 159, 249 classical/neo-classical/monetarist/newclassical models, 348–9 Cobb-Douglas production function, 29 Cochrane–Orcutt estimation method, 107 Cohn, E., 51 cointegration tests, 384, 385 Collier, 106 commodity, 2–3, 23, 35 Community Development Employment Projects (CDEP), 12 Index competitive economy, unemployment in neoclassical model of, 331–3 congestion costs, 408, 410 Corbett, L., 381 Corcoran, M., 152 corporatism, 262, 271–2 and employment creation in Australia, 276–8 implications for wage outcomes in Australia, 273–5 testing move towards corporatism in Australia, 272–3 costs of unemployment in Australia, 403–54 economic costs, 310, 352, 393, 395, 439 non-pecuniary costs, 445, 449 pecuniary costs, 445, 448 political costs, 327, 403, 408 social costs, 227, 229, 327, 411, 453, 454 unemployment and mortality in England and Wales, 459–70 unemployment in EC, 393–401 costs to government, 439 costs of administration of unemployment benefits, 444 costs of labour market programs, 443 DSS programs, 444 LMP, 440, 442 marginal effect of unemployment, 442 total departmental administrative expenditure, 445 transfer payments, 439 costs to individuals, 409–10 to society, 410–11 of turnover model, 336 Crean, S., 374, 375 creative destruction, 320 credentialism inflation, 316 Cremer, G., 213, 223 Cross, R.B., 412 Cusum Squares test, 243, 244 cyclical effects, 279 Daly, A., 48, 53, 128, 132, 134, 135, 136–42, 176, 340, 341 David, C., 31, 35 Davis, S.J., 1, 44, 320 deadweight, 375 Debelle, G., 146, 148, 340 477 deindustrialized society, see postindustrial society demand for labour, 28–9, 109–11, 131 econometric analyses, 31 efficiency wages, 30 “labour as quasi-fixed” input, 29–30 labour services, 28, 30 market wage, 30–1 outsourced activities, 31 impact of technological change, 29, 30 “well-behaved” production function, 29 demographic trends, 278 Denison, E.F., 51 Department of Employment data (DE data), 82, 83 Department of Social Security (DSS), 269 developing countries, 11 Diamond, P., 7, 16, 287, 289 discouraged workers, 38 effect, 418 discrimination, 4, 34, 40, 57, 229, 304, 326, 364 disequilibrium model, 114, 117, 122 estimation by maximum likelihood methods, 122, 122 labour demand function, 121 see also Wells’s theoretical model disguised unemployment, see hidden unemployment Dixon, D., 440, 453 Doeringer, P.B., 24 Doiron, D., 177 Dolton, P., 375 Dowrick, S., 261, 270, 272, 289, 419 Dowrick, S.J., 339 Doyle, J., 445, 447 Driffill, J., 270, 341 Drobny, 108 dual economy, 34 Dube, A., 175 Duc, N.H., 340, 341 Duff, E., 352 Duggan, J., 80, 104 dummy variables, 255 duration dependence see state-dependence Durbin, J., 116, 242 dynamic(s) adjustment variables, 255 specification, 114–16, 175 of unemployment, 253–8 of youth unemployment, 152–70 478 Index earnings related supplement (ERS), 239, 255 econometric analysis of unemployment in Great Britain, 239, 241, 247 aggregate demand variables, 247 Chow tests, 240 complications, 247–9 Cusum Squares test, 243, 244 forward recursive regression, 243–6 money illusion test, 242 M–S equation, 239–40, 242, 245 part-time female labour, 246 TIMVAR program, 243 see also Australian unemployment econometric modelling and evidence, 104–5 employment functions, 108–9 labour demand and supply equations, 109–11 unemployment functions, 105–8 economies, 1, 270, 346 capitalist, 2, 9, 43 OECD, 42, 261 educational attainment, 136 efficiency wage models, 335 unemployment, 336 versions, 335–6 wage cuts, 337 efficiency wages, 8, 30, 31, 45, 132 arguments models, 335–7 elasticity/elasticities, 30, 36, 138 elasticity of demand, 128 employment, 135, 277 employment elasticities, 135, 221, 276, 277, 340 labour cost elasticities, 99, 109 of labour demand, 275, 375 negative, 142 output elasticity, 109, 116 price elasticity, 110, 134 relative wage, 128 scale, 30 scale elasticity, 30 wage elasticity(ies), 11, 112, 128, 133, 141, 147, 148, 150, 341 Eldridge, D., 128, 132, 134, 135, 176, 340, 341 Eltis, W., 246 employed individuals, 410 employers attitudes, 375 employment, 4, 38, 42, 43 in conventional economics, 43 demand functions, 134 elasticity, 135, 277 full, 43 functions, 108–9 in OECD countries, 42–3 theories, 44–5 see also unemployment England and Wales, unemployment and mortality in, 459, 468 data for SMR, 461 diagnostic statistics, 466 instrumental variable estimates, 464 linear and log-linear models, 465 methods and results, 461–70 OPCS Longitudinal Study, 461 OPCS social classes, 462 selection problem, 469 environmental variable, 136 equality, equilibrium, 348 employment stock, 108 rate, 13, 423 relationship, 142 social opportunity costs, 52 stock, 108 unemployment, 335 wages, 54 error correction model, 146, 147, 148, 389, 390 error specification, 114–16 European Community (EC), 393 cost assessment, 393–6 costs and benefits, 395–6 growth of unemployment in, 394 real costs of unemployment, 396–401 unemployment in, 393 European Union (EU), 309 Evans, J.M., 116, 243 “experimental economics” methods, 24 exploitation of labour, 24 externalities, 47, 48 fairness, 45 Falk, A., 35 family decision-making, 39 Fehr, E., 24, 31, 35, 45 Feldstein, M., 84, 351 Ferber, M.A., 39 Index “First Differences” method, 434, 436, 439, 440 Fisher, N.W.F., 425 Flemming, J.S., 248 flows of unemployment inflows and outflows, 253–4 methodology, 254–5 results, 255–8 Fordism, 336 forward recursive regression, 244, 246 Cusum squared residuals normalised, 243, 245 Fox, A.J., 459 freedom, Freeman, R.B., 25, 270, 324, 330, 341, 342 Friedman, M., 25, 339, 401 full employment, 43, 45 full-time employment, 133–4 Gabbitas, O., 128, 132, 134, 135, 340, 341 Gächter, S., 24, 31, 45 Galenson, W., 205 gender, 24 earnings function for non-Indigenous Australians, 69 pattern of unemployment by, 209 segregation, 34 trend rate of growth of participation by, 291 unemployment and underemployment by, 211 General Household Survey (GHS), 79 general-to-specific methodology, 282–3 generous unemployment benefits, 7, 176, 197, 309, 325 Geske, T.G., 51 Global Financial Crisis (GFC), 11, 173–4 Australian youth labour market, 177–83 factors explaining rise in youth unemployment, 191–7 literature review, 174–7 youth labour market after, 183, 184–91 global unemployment, 211 Glyn, A., 176 Goldblatt, P.O., 459 Gorgens, T., 177 Gravelle, H.S.E., 459 Greenwood, W., 78 Gregory, R.G., 48, 212, 263, 316, 337, 342 gross domestic product (GDP), 1, 173, 309, 397, 423 479 Grossman, H.I., 332 Grubb, D., 350 Gruen, F., 273, 275 Gujarati, D., 240 Hall, R.E., 84, 351 Haltiwanger, J.C., 1, 44, 320 Hargreaves-Heap, S.P., 353 Harris, J.R., 295 Harris–Todaro rural–urban migration movements, 221 health, 24, 180 physical, 449 poor, 154 services, 48, 198 Heckman, J.J., 152, 176 Hérault, N., 177 Herron, J., 48 heterogeneity, 282, 364 hidden unemployment, 43, 212–13, 419 duration of unemployment, 215 estimation, 420 see also luxury unemployment hypothesis; unemployment Higgins, C.J., 276 Higher Education Contribution Scheme (HECS), 53, 56 Hill, M.S., 152 Hillman, K., 176 Household and Income Labour Dynamics (HILDA), 177 household goods, 40 Howell, D.R., 176 Hughes, B., 365 Hui, W.T., 152, 281 human capital, 6, 10, 99 deterioration, 398, 424 development, 25 investment in, 36, 49 loss of, 12, 404 theory, 49, 155 Hutchinson, G., 459 hysteresis, 309, 312, 412 immigration, 6, 24, 34, 449–51 increased life expectancy, 49, 61 Indigenous Australians age on leaving school for, 67 descriptive statistics of variables, 68 disadvantages in society, 48 earnings function for, 69 480 Index Indigenous Australians – continued improved education for, 47–8 increased life expectancy, 49 with low levels of education, 57 mean wage and growth, 70 number and percentage of prisoners, 71–2 social rate of return to education, 60 U-shape, 61 see also social rate of return individual and social costs, 445 estimated impacts of increase in male and total unemployment rates, 452, 454 measure of poverty, 453 non-pecuniary costs of unemployment, 449 part-time employment, 447 pecuniary costs of unemployment, 448 periods of cyclical unemployment, 451, 452 scarring effect, 445 unemployment benefit replacement rates for hypothetical families, 447 Indonesian unemployment, 204–5, 209 changes in unemployment, 219–27 hidden unemployment, 212–14 luxury unemployment hypothesis, 214–19 measuring unemployment and surplus labour, 209–10 structure of unemployment, 206–9 and under-employment, 210–11 wage employment, 212 see also Australian youth labour market Industrial Reserve Army (IRA), industries, 33 distribution of employment, 135 of employment, 300 labour-intensive, 221, 222, 227, 310 smoke-stack, 132, 309 sunrise, 309 youth-intensive, 92, 103, 107, 134 inflows, 253, 257, 281 estimation, 255–6 insider outsider theory, 337 institutional constraints, 3–4 Instrumental variables (IV), 254, 256 inter-temporal substitution, investment, 2, 8, 25 involuntary job separations, 154 involuntary under-employed persons, 210 involuntary under-employment, 210, 211 involuntary unemployment, 332 Jackman, R., 43, 281, 334, 350 Jahoda, M., 34 Jayasuriya, S., 219, 220, 222 job creation, 320, 321, 322 impact of trade on, 323 job destruction, 320, 321, 322 impact of trade on, 323 job displacement, 375 jobless ratio, 417 jobseekers in Indonesia, 212 Johnes, G., 49, 50 Johnson, G.E., 43 Jones, D.R., 459, 472, 473 Jones, Gavin W, 231, 234 Joseph, S., 30 Joubert, C., 174, 191 Juhn, C., 39 Junankar, P.N., 1, 23, 28, 33, 38, 42, 45, 47, 48, 77, 92, 102, 128, 129, 133, 152, 173, 175, 176, 204, 209, 210, 218, 239 253, 293, 308, 319, 330, 339, 341, 346, 350, 361, 365, 366, 373, 374, 378, 393, 403, 419, 445, 449, 452, 459 junior earnings, 137–8 Kalecki, M., 6, 8, 13, 355 Kalisch, D., 434, 436 Kapuscinski, C.A., 48, 293, 361, 366, 373, 374, 378, 379, 403, 445, 449, 453 Kenyon, P., 389 Keynes, Keynesian, 6, 7, 8, 25, 43, 44, 176, 325, 332, 349, 350, 405, 407 Keynes, J.M, 332 Keynesian economists, 7–8, 44, 349–50 Kiefer, 121 Kim, J.H., 205 King, J.E., 316 Kirby, M.G., 273, 277, 278 Kostenko, W., 177 Krueger, A., 175 Krueger, A.B., 26, 31, 339 Krugman, P.R., 44, 325 Kryger, T., 161 Kuo, S., 205 Index labour demand, see demand for labour labour economics, 23 econometric methods, 24 interdisciplinary study, 24 labour markets, 23–4 labour supply and demand, 26 NAIRU, 25 studies of unemployment, 24–5 labour education, 131 labour force growth and unemployment evidence on determinants of labour supply, 279–81 theoretical issues, 278–9 labour force participation/labor force participation, 10, 33, 38–41, 178, 186, 190, 223, 231n13, 233n41, 281, 297, 375, 419, 455n11 labour force participation rate, 38 dependency, 39–40 economic analysis, 40 employment and unemployment, 38 interaction with tax and welfare systems, 40–1 LDCs, 38–9 male and female, 39 reservation wage, 39 Labour Force Surveys (LFS), 79, 104 labour force, 210 method, 405 participation effects, 375 labour market programs (LMPs), 440 costs of, 443 labour market, approaches to unemployment, 7–9 demand for labour, 28–31 employment, 4, 42–5 features of labour as commodity, 2–3, 23 flexibility, 322–4 growth of youth unemployment, 103 institutional constraints, 3–4 labour economics, 23–6 labour force participation rate, 38–41 labour supply, 33–6 market programmes, 302 social rate of return, 47–61 types, unemployment, 5–7, 9–10, 42–5 see also youth labour markets (YLMs) labour market program (programmes), 12, 134, 282, 302–3, 306n13, 310, 481 311, 320, 343, 363, 373, 374, 375, 376, 378, 381, 383, 384, 386, 387, 388n1, 440, 442, 443, 445 labour power/labor power, 2, 8, 9, 28 labour services, 2, 28, 30, 45, 350, 354 labour substitution, 375 labour supply, 3, 33, 131 commodities, 34–5 dependency, 35 elasticity, 36 expanded models, 35 gender differences, 34 LDCs, 33–4 model, 280 neoclassical models, 34 selection bias, 35–6 theoretical modeling, 36 labour theory of value, 24 labour training, 131 labour-intensive industries, 222 lagged real unit labour costs (LULC), 384 Lagrange Multiplier test (LM test), 115 laissez-faire government, 77 Lancaster, T., 248 last-in-first-out (LIFO), 79, 103 Lawrence, R.Z., 44, 325 Layard, R., 43, 106, 107, 110, 176, 272, 281, 334, 350 Lazear, E.P., 26 Leeves, G., 375 Leibenstein, H., 30 Leigh, A., 176 less developed countries (LDCs), 33, 38, 293 labour force participation rate in, 38–9 labour supply in, 33–4 less educated youth, 225–6 Lester, T.W., 175 Levine, P., 281, 364, 365 Lewis dual economy model, 293, 295, 304–6 Lewis equation, 273 Lewis, P.E.T., 151, 176, 202, 273, 274, 277, 278, 287, 288, 290 Lewis, W.A., 33, 37 see also dual economy Li, Y.P., 449 Lindbeck, A., 44, 337 Liu, J., 47, 53 482 Index log of real benefits (LRBEN), 240, 242, 244 coefficient, 246 long term unemployment (LTU), 156, 267–8, 281, 301, 359, 361 Australian female proportions, 269 Australian male proportions, 268 disaggregation, 269–70 econometric estimates, 282–4 mean duration of unemployment stock, 269 projections, 361–70 theoretical issues, 281–2 longer-term trends in Indonesian unemployment change, 224–7 stability, 222–4 long-term unemployment-Working Nation (LTU-WN), 373, 377 actual and predicted, 381, 382, 386, 387 behaviour, 380 cointegration tests, 385 comparison with recession, 376 diagnostics of estimated models, 380 dynamic projections, 381 employment function: men and women, 385 estimated models of proportion, 379 estimation of employment functions, 386 evaluation, 375–86 exists from LTU to labour market programmes, 383 forecasting employment, 383–6 forecasting long-term unemployment, 376–83 gross domestic product, 377 labour market programmes, 384 policy package, 373–5 proportion, 377–8 structural stability, 380 unit root tests, 385 Lucas, R.E., Jr., 35, 333, 349 Lucas–Rapping model, 349 luxury unemployment hypothesis, 214, 216 contrast between lower status and better-off households, 218 durations of unemployment, 218–19 relationship between socio-economic status and labour force attachment, 216, 218 testing, 216 unemployment and employment rates, 217 see also hidden unemployment Lynch, L., 80, 94, 98, 104, 106, 107 macro-econometric models, 277 macroeconomic model, 276–7 macro-economic policies, 284 Maddala-Nelson approach, 111, 118 Main, G.M., 84, 94 Makeham, 106, 107 Maki and Spindler equation (M–S equation), 239–40 Maki, D., 239, 240 male proportional long term unemployment (MPLTU), 282–3 Malinvaud, E., 338 Manning, A., 26, 175 Manning, C., 204, 208, 209, 210, 218, 219, 220, 221, 222, 227 Marceau, J., 129 marginal costs, 423 marginal revenue product curve (MRP curve), 29 market wage, 30–1 Marks, G., 177 Marks, G.N., 176 Marsden, D., 352 Marshall, A., 28 Marx, K., 3, 6, 8, 9, 13, 24, 44 Marxist, 3, 8–9, 350 Matthews, R.C.O., 42 Maurel, A., 174, 191 Mavromaras, K., 174 maximum likelihood estimation methods, 110 Mazumdar, D., 226 McCalman, P., 128, 132, 134, 135, 340, 341 McFadden, D., 136 Mclean, B., 176 McMahon, W.W., 50, 62, 64, 214, 234 measurement bias, 139–40 Medoff, J.L., 25 Merrilees and Wilson model (M–W model), 111–13 Merrilees, 109, 110, 111 Metcalf, D., 175 micro-processor revolution, 246 Miller, M.H., 350, 353 Index Miller, P.W., 176, 302 minimum rates of pay, 136 minimum wage, 8, 35, 103, 142, 325, 339, 341, 348 econometric work, 142–4, 145–6 employment elasticities, 340 and employment of youths, 341 error correction model estimation, 148 estimated models, 144, 146 impact of minimum wages on employment, 339 impact on employment, 30, 36, 135, 137 levels equation for total hours, 147–8, 149 levels with relative wage, 149 national minimum wage, 175 policies, 26 regulation, 138 simple log linear equations, 147 Mitchell, W.F., 273, 436 modern sector, 294, 295, 296 money illusion test, 242 Mooney, A., 459 Moore, D., 278 Morris, J.N., 461 mortality, 395, 449, 459–72 Mortensen, D.T., 25, 176, 258, 333, 349, 406 Moser, K.A., 459, 461, 465, 471 Mudd, W., 449 Murphy experiment, 277 Murphy, C., 273, 274, 276–7, 279 Nadiri, M.I., 109 National Insurance (NI), 104 National Labour Force Survey (Sakernas), 205, 221 national minimum wage (NMW), 175 national trends, 222 natural rate, 407 natural rate of unemployment, natural rate, natural unemployment, 397, 407, 430, 440, 441 natural unemployment, 414 Neale, A., 129, 133 Neale, A.J., 92, 102 negative elasticities, 134 neoclassical economics, 142, 146 neoclassical economists, 6, 7, 44, 99, 100, 103, 104, 325, 343, 349 483 neoclassical model, 129 search theories of unemployment, 333 unemployed people, 334 unemployment in, 331–3 neo-Keynesian, neo-Keynesian economists, Neumark, D., 30, 31, 175 new classical economics/economists, 6, 7, 43, 354 New Earnings Survey (NES), 80, 105, 124 Newell, A., 270, 286 Newell and Symons analysis (N-S analysis), 270 Nguyen-H.D., 128, 132, 134, 135, 176 Nickell, S., 29, 43, 176, 248, 254, 257, 272, 334, 341 Noble, M., 80, 104 nominal wage inflation, 276 non-accelerating inflation rate of unemployment (NAIRU), 6, 25, 43, 272, 273, 276, 277, 284, 287n7, 309, 365, 407, 414, 423 non-Indigenous Australians descriptive statistics of variables, 68 earnings function for, 69 increased life expectancy, 61 social rate of return to education, 60 U-shape, 61 non-traditional forms of employment, 316 non-Walrasian market, 92 not-in-the-labour-force (NILF), 152, 156, 178, 311 multinomial logit, 169 unemployment, 157, 158, 165 occupations, 24, 33, 154, 162, 166, 400, 450, 452 professional, 300 time-filling, 354 October Earnings Enquiry (OEE), 105, 124 Oi, W.J., 26, 29 Okun, A., 2, 401, 405, 423, 434, 436 Okun’s coefficient, 423 Okun’s law method, 400, 434 actual GDP and potential output, 441 average wage and product methods, 434 “First Differences” method, 436, 439, 440 two stage procedure, 435 484 Index O’Neill, D., 375 OPCS Longitudinal Study, 461 Ordinary Least Squares, 176 Organisation for Economic Co-operation and Development (OECD), 36, 39, 173 outflows, 253, 257, 281 estimation, 255–6 Paldam, M., 434, 436 Panitch, L., 271 partial adjustment equation, 108 partial gift exchange relationship, 336 part-time employment, 133–4 PC study, 140–1 Pehkonen, J., 378 Pencavel, J., 40 percentage of long-term unemployment (PLTU), 188, 282, 319, 372, 378 Petrongolo, B., 44 Phelps, E.S., 25, 333, 334, 349 Piggott, J., 374 Pill, 39 Piore, M.J., 24 Pissarides, C.A., 25, 44, 176, 273 Platt, S., 459 policies, 304–5, 324 active labour market policies, 325 causes of unemployment, 324 reciprocal obligation, 326 recommendations, 304–5 political business cycle, 405 Pope, D., 449 post-compulsory secondary education, 54 post-industrial society, 78 post-Keynesian, 7, 8, 43 post-Keynesian economists, 7–8 post-tax earnings, 49 Potter, S., 39 pre-tax earnings, 49 price variables, 255 Price, S., 350 private rate of return estimation, 48 probability of accepting offer, 154 of job loss, 153 of obtaining job, 153, 154 production function, 29, 31, 133, 134, 331 productivity, 49 index, 240 wages and, 30 workers, 3, 6, 13, 51, 154 youth labour, 193 projections of LTU, 361, 362 characteristics, 368 costs, 365 empirical estimates and, 366–70 experience, 363–4 measurement and theory, 362–5 persons, 370 post sample, 368, 369 post sample predictions, 369 proportion of unemployment, 367 property, Psachoropoulos, G., 49 quasi corporatist strategy, 317 quasi-fixed input, labour as, 29–30 quasi-reduced form, 106 race, 24 Radical economists, 8–9 Raffe, D., 92 raising of school leaving age (ROSLA), 104, 126 Rapping, L.A., 35, 333 rational economists, 309 rational expectations (RE), 25, 277, 349 Rawls, J., 51 real costs of unemployment, 396 deterioration of human capital, 398 factors, 399–400 using Okun’s Law method, 400 output loss, 397 static costs of unemployment, 397 static output loss costs of unemployment, 401 real wage overhang (RWO), 275 real wages, 28, 92, 219, 272, 279, 326 of women, 39 reciprocal obligation, 326 reciprocity, 45 recurrent spells of unemployment, 153 recurrent unemployment, 152 data, 155–62 explanations, 153–5 results, 159, 162, 166–70 see also unemployment Index Reich, M., 175 relative labour cost, 116–17 females, 119, 126 males, 118, 126 relative wages and youth labour market, 102–4 econometric modelling and evidence, 104–11 Wells’s theoretical model, 111–17 replacement rate, 176–7, 196, 197 replacement ratio, 445, 446 reservation wage, 35, 39 retention rates, 131 Ricardo, D., 24 Rice, P.G., 110, 111, 133 Richard, S., 205 Richardson, C.J., 106, 107, 273, 365 Rimmer, R.J., 316 Rimmer, S.M., 316 Roberts, K., 80, 104 robustness tests, 116 Rodgers, G., 205, 214 Romer, P.M., 49, 51 Rosen, S., 109 Ross, R., 445, 447 Rowthorn, R.E., 334, 341, 342 Russell, W., 384 Sargent, T.J., 349 Sawyer, M., 239, 240, 248 scarring, 177 effect, 445 Schuh, S., 1, 44, 320 Schumpeter, J.A., 320 screening device, 375 secondary workforce, 416 secular stagnation process, Seemingly Unrelated Regressions Estimation methods (SURE methods), 110, 134, 254, 255–6 segmented labour market hypothesis, 129, 155 selection bias, 35–6 selection problem, 460, 469, 471 Sewell, C., 176 Shapiro, C., 8, 13, 30 Sheehan, P., 342 shirking model, 335–6 Simes, R.M., 273, 365 simulation approach, 274 485 Sinclair, S., 214 Singer, H.W., 460 skills, 2, 6–7, 13, 36, 154, 174, 282 Sloane, P., 174 Smith, A., 17 Smith, Adam, 24 Smith, P., 281, 364, 365 Smith, R., 459 smoke-stack industries, 132, 309 social costs of education, 54 social rate of return estimation, 47, 65–6 benefits, 51–2 data and methods, 53–5 to education, 58 externalities, 47, 48, 54–5 individualistic welfare function, 50–1 information on taxes, 50 investing in people, 49–52 limitations, 66–7 private costs and benefits, 52 private rate of return, 60–1 results and interpretation, 55–61 social costs and benefits, 48, 49, 52 society’s welfare, 50 sociological models, 336 Solow, R.M., 3, 24, 45 Spindler, Z.A., 239, 240 stability, 222–4 tests, 116, 117 “stagflation” theories, 25 standard neoclassical models, 34 state or duration dependence effect, 364 state-dependence, 98, 282 Stern, J., 152, 459, 461 Stewart, M., 174 Stiglitz, J.E., 8, 13, 30, 335 Stretton, A., 442 structural changes, 8, 11, 92, 103, 239, 322 variables, 12, 254, 256, 258 in wage inflation, 278 Summers, L.H., 1, 159, 249 Sundrum, R.M., 214, 228 sunrise industries, 309 supply equations, 109–11 surplus labour in Indonesia, 211, 212 surplus value, 24 surveys of employers, 342–3 Symons, J., 270, 286 486 Index Tease, W., 384 Technical and Further Education (TAFE), 57 technological change, 1, 13, 29, 323 tertiary educated youth, 226 Thatcher, M., 246, 331 time series model, 123, 132, 133, 361, 378 time-allocation theory, 406 time-series analysis, 140, 176–7 TIMVAR program, 243 Titmuss, R.M., 461 Todaro, M.P., 221, 230, 295, 304, 306 total costs, 423 total working age population, 212 trade unions, 78, 99, 271, 309, 348, 396 traditional sector, 294, 295 traineeship, 100 Training for Aboriginals Programme (TAP), 303 transfer payments, 439 “Trial Gaps” method, 434 Trivedi, P.K., 152, 281 Turnham, D., 38, 42, 205, 206 Udall, A.T., 214 unavoidable frictional unemployment, 407 underclass, 310 underemployment, 43–4 by gender, urban and rural areas, 211 in Indonesia, 210 rate estimation, 209 unemployed awaiting placement (UAP), 300, 301 unemployed individuals, 409–10 unemployed persons, 210 unemployment rate (UR), 366, 414 unemployment stock, 253, 258 actual and fitted, 259 mean duration of, 269 unemployment, 5–7, 9–10, 38, 42, 43, 131–2, 156 approaches to, 7–9 in Australia, 308–27 benefits, 6, 7, 10–12, 14, 44, 106, 154, 176, 193, 248, 303, 354–5, 405 see also benefit-income ratio; replacement rate class costs, 352–3 classical/neo-classical/monetarist/newclassical models, 348–9 components, 43–4 costs, 351–4 disguised unemployment, 212, 230n1 duration of completed spells, 160, 161–2 econometric analysis in Great Britain, 239–49 evidence on labour market flexibility and, 339–43 explanations, 44 fairness and reciprocity, 45 functions, 105–8 hidden unemployment, 43, 212, 263, 264, 279, 281, 419, 420 individual benefits, 354 individual costs, 351–2 in Indonesia see Indonesian unemployment involuntary unemployment, 7, 35, 43, 92, 332, 348, 407, 409 Keynesian, 349–50 long term unemployment, 11, 12, 42, 77, 173, 175, 184, 191, 301, 308, 309, 310, 317, 373, 376, 386 luxury unemployment, 205, 214, 216, 218, 230n1 Marxist/radical, 350 mean duration of unemployment, 86, 162, 214, 215 in models of imperfect competition, 334–5 multinomial logit, 168 natural rate, 43 in neoclassical model of competitive economy, 331–3 and NILF, 157, 158, 165 perspectives on Australian unemployment, 261–84 political economy, 346 scale of problem, 346–8 by sex, 226–7 society benefits, 355 society costs, 353–4 spells, 157, 158, 160, 161, 163, 164 standardised unemployment rates for industrialised countries, 347 structural change and flows, 253–8 theories, 44–5 total weeks, 158 Index unemployment duration(s), 77, 80, 87, 362, 364, 365, 370, 423, 431, 456n18 unemployment rate, 1, 5–6, 8, 10–15, 25, 43, 48, 80, 98, 103, 105–7, 112–13, 116, 121, 155, 157, 170, 173–4, 176–80, 183–8, 191, 193, 195–8, 205–10, 212, 214, 216, 219–23, 225–7, 229–33, 240, 244, 247, 261, 262, 265–9, 281–5, 293–4, 296–300, 302, 305, 308–10, 312–19, 325–6, 328, 330–1, 335, 337, 341–2, 347–8, 365–8, 371, 378, 380–1, 396, 399, 400, 407–8, 414–21, 423, 425, 428–30, 434, 436, 438, 442, 445, 449–56, 461–70 voluntary unemployment, 348, 406, 407, 424 wait unemployment, 214 see also recurrent unemployment unequal power relationship, urban unemployment in Indonesia, 210 urban youth, 222–4 Van Reenen, J., 323 Vermeulen, F., 35 Vickery, J., 146, 148, 340 virtual wage, 140 Visaria, P., 214 Volker, P., 176 voluntary under-employed persons, 211 voluntary under-employment, 210 wage cuts, 330 centralisation, 341–2 competitive labour market wage rates, 338 efficiency wage models, 335–7 evidence on labour market flexibility and unemployment, 339–43 government policy, 337–9 insider outsider theory, 337 involuntary unemployment, 332 minimum wages, 339–41 neoclassical models of unemployment, 333–4 surveys of employers, 342–3 unemployment in models of imperfect competition, 334–5 unemployment in neoclassical model of competitive economy, 331–3 487 wage outcomes C-D analysis, 270–1 corporatism, 271–2 implications of corporatism in Australia, 273–5 N-S analysis, 270–1 wage restraint and employment corporatism and employment creation in Australia, 276–8 theoretical issues, 275–6 wage(s) distribution, 248 employees, 212 employment, 212 inequality, 42 inflation equations, 274 setting, 335 weighted average, 116 wage-setting institutions C-D analysis, 270–1 centralisation, 271 corporatism, 271–2 implications of corporatism for wage outcomes, 273–5 N-S analysis, 270–1 testing move towards corporatism in Australia, 272–3 Wagstaff, A., 461 wait unemployment, 214 Waite, M., 176, 341 Warr, P., 459 Wascher, W., 31, 175 Watson, I., 176 Watts, M., 273, 436 Webb, A.E., 240 Weiss, A., 30 “well-behaved” production function, 29 Wells, B., 102, 107, 109, 111–117, 118, 123, 127 Wells’s theoretical model, 111 alternative models of employment, 120 criticism, 114 data and Wells’s results, 113–14 dynamic and error specification, 114–16 M–W model, 111–13 relative labour cost, 116–19 robustness tests, 116 stability tests, 116, 117 see also disequilibrium model 488 Index White, B., 226 Wickens, M.R., 260 William, W., 30 Williams, J., 365 Wilson, 109, 110, 111 Withers, G., 450, 453 Wood, A., 324 Wood, M., 152, 176 worker discipline device, 13 Working Nation, see long-term unemployment-Working Nation (LTU-WN) Yellen, J.L., 26, 45, 407 Young Workers Scheme (YWS), 77, 103 youth earnings, data on, 104 youth employment, 11, 81, 82, 104, 123, 128, 133, 136, 137, 138, 139, 141, 142, 180, 186, 189, 341 employment profile within, 138 modelling minimum wages and, 142–50 youth labour markets (YLMs), 128 background, 129, 131 British youth labour market in crisis, 77–100 choices at critical ages for youths, 130 criticism on Daly et al study, 136–9 criticism on econometric results, 139–42 falls in GDP, 184–91 after GFC, 183, 184 Indonesian unemployment, 204–27 modelling minimum wages and, 142–50 models, 131–4 recurrent unemployment, 152–70 relative labour cost, 126–7 relative wages and, 102–22 research literature in OECD, 175–6 research review, 134–6 Youth Opportunities Programme (YOP), 77, 79, 102 youth own wage elasticity, 141 Youth Training Scheme (YTS), 77, 79, 99–100, 102–3 youth unemployment rates (YUR), 178–80, 185, 197 youth unemployment, 10, 11, 77, 79, 82, 102, 103, 104, 105, 107, 128, 131, 152–71, 173–200, 204, 206, 208, 220, 222, 223, 226, 227, 228, 309, 347, 353, 393, 394, 399, 453 biased downwards, 87 data on earnings of young people, 80 DE data, 82, 83 explanation for, 92–3 factors explaining rise in, 191–7 females, 82, 84, 86 first employment of young people, 81 GHS data for Great Britain, 79, 80, 82 growing problem, 85–7 growth, 79, 103 LFS, 79 long-term, 87, 88 males, 81, 83, 85 impact of minimum wages, 176–7 in OECD countries, 102 stock estimation, 105–6 time series data, 79 unemployment stock, 84 youth-intensive industries, 92, 103, 107 Zehnder, C., 35 Zhang, W., 174 ... brief surveys of the labour economics, ” the “demand for labour, ” the “supply of labour and the labour force participation rate.” It then discusses the concept of employment and unemployment. . .Economics of the Labour Market Economics of the Labour Market Unemployment and the Costs of Unemployment P N (Raja) Junankar Honorary Professor, Industrial Relations... 362 5.1.2 Proportion of unemployment which is long- term unemployment and the unemployment rate (females) 367 Proportion of unemployment which is long- term unemployment and the unemployment rate