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An Employment Equation for Australia *
Author(s) -
DIXON ROBERT,
FREEBAIRN JOHN,
LIM G.C.
Publication year - 2005
Publication title -
economic record
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.365
H-Index - 42
eISSN - 1475-4932
pISSN - 0013-0249
DOI - 10.1111/j.1475-4932.2005.00256.x
Subject(s) - economics , business cycle , recession , variable (mathematics) , wage , work (physics) , constraint (computer aided design) , econometrics , budget constraint , labour economics , demographic economics , macroeconomics , mathematics , microeconomics , engineering , mechanical engineering , mathematical analysis , geometry
Changes in standard hours of work, as occurred in the 1970s and 1980s, alter the budget constraint facing employers and their employment decisions. Using quarterly data for the period 1969:1–2004:1, an employment equation for Australia that includes standard hours as well as the usual output, real wage and trend explanatory variables is estimated. Standard hours are found to be a significant explanatory variable, and omission of the variable results in biased estimates of the parameters on the other variables, especially on the real wage. When we allow for asymmetric adjustment, employment decisions are found to respond more quickly to changes in economic conditions in recessions than in other phases of the business cycle.