Wages and Unemployment in Australia*

Abstract

This paper reviews various models that may be used to analyze the inflation-unemployment problem in Australia. The focus is on the unemployment problem, rather than on inflation, and on the role of wages, itoininal und real, in affecting this problem. Models discussed include the Popular Keynesian, Phillips Curve, Fixed Coeflcient and Neoclassical Models. The possibility of increasing returns is considered. Australian evidence bearing on the appropriateness of ihese models is discussed. The effect of demand expansion on the exchange rate and hence real wages is stressed. Some emphasis is placed on the concept of 'union-voluntary' unemployment. At the end possible solutions to the unernployment problem are summarized.This paper reviews various models that may be used t o analyze the unemployment problem in Australia. The focus is on the role of wages, nominal and real, as well as of aggre-2 per cent during the post-war period until 1973.

The determinants of labour demand in Australian manufacturing

“…E). The significance of the n/RWvariable supports those who argue that a profit squeeze in manufacturing aflected output decisions and hence employment in that sector (see, for example, Sheehan and Rose, 1975), and the numerous observers who cite real wage change as a significant cause of labour demand decline during this period (see, for example, Corden, 1979).…”

Youth Unemployment and Its Educational Consequences

“…Most concrete suggestions for improving the employment situation of youth tend to follow the latter strategy; that is, to redistribute the burden of unemployment from youth to adults. For example, it has been suggested that the employment of youth would be more attractive in Australia (Corden, 1979) and the US (Coleman et al, 1974:168) if youth were eligible for a lower minimum wage.…”

The Role of Fiscal Policy in the Eighties*

“…One final reason why fiscal policy may be unable to increase real output and employment is set out in Corden (1979). Corden argues that, if real wages (not money wages) are inflexible downwards, and if the economy is subject to decreasing returns, then expansionary fiscal (or monetary) policy will only increase the rate of inflation, not real output.…”