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The Macroeconomic Consequences of Long‐Term Unemployment
Author(s) -
Flatau Paul,
Lewis Philip E. T.,
Rushton Allison
Publication year - 1991
Publication title -
australian economic review
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.308
H-Index - 29
eISSN - 1467-8462
pISSN - 0004-9018
DOI - 10.1111/j.1467-8462.1991.tb00402.x
Subject(s) - unemployment , hysteresis , economics , term (time) , full employment , labour economics , keynesian economics , demographic economics , macroeconomics , physics , quantum mechanics
This article examines the linkages between long‐term unemployment and two important recent debates in Australia: first, whether unemployment exhibits hysteresis tendencies; second, the nature of the relationship between unemployment and real wages. Our findings favour the hysteresis account in that the evidence rejects an equilibrium relationship between long‐term and total unemployment. Also, the effect on real wages of an increase in the number of longterm unemployed is found to be both positive and significant.