Table Of ContentEconomics 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
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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
1 Introduction 1
2 The Labour Market 21
2.1 Labor Economics 23
2.2 Labor Demand 28
2.3 Labor Supply 33
2.4 Labor Force Participation 38
2.5 Employment and Unemployment 42
2.6 Estimating the Social Rate of Return to Education
for Indigenous Australians 47
3 Youth Labour Markets 75
3.1 The British Youth Labour Market in Crisis 77
3.2 Relative Wages and the Youth Labour Market 102
3.3 The Youth Labour Market: Anecdotes,
Fables and Evidence 128
3.4 The Dynamics of Youth Unemployment:
An Analysis of Recurrent Unemployment 152
3.5 The Impact of the Global Financial Crisis
on Youth Unemployment 173
3.6 Choosy Youth or Unwanted Youth? A Survey
of Unemployment 204
4 Unemployment 237
4.1 An Econometric Analysis of Unemployment
in Great Britain, 1952–75 239
4.2 The Dynamics of Unemployment: Structural
Change and Unemployment Flows 253
4.3 Perspectives on Australian Unemployment:
The Impact of Wage Setting Institutions in the 1980s 261
4.4 Aboriginal Employment and Unemployment:
An Overview 293
4.5 Unemployment in Australia: Models, Myths and Mysteries 308
4.6 Are Wage Cuts the Answer? Theory and Evidence 330
4.7 A Political Economy of Unemployment:
Causes and Consequences 346
vii
viii Contents
5 Long-Term Unemployment 359
5.1 Projections of Long-term Unemployment 361
5.2 Was Working Nation Working? 373
6 Costs of Unemployment 391
6.1 Unemployment in the European Community:
Counting the Costs 393
6.2 The Costs of Unemployment in Australia 403
6.3 Unemployment and Mortality in England and Wales:
A Preliminary Analysis 459
Index 474
List of Figures and Tables
Figures
1.1 Unemployment rates in the OECD (%) 5
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
3.5.2 Part-time employment as a share of total
employment (%), males aged 15–19 and 20–24 years,
Australia 1997–2013 183
3.5.3 Part-time employment as a share of total
employment (%), females aged 15–19 and 20–24 years,
Australia, 1997–2013 184
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
3.5.6 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
3.5.9 Youth employment-population ratios,
Australia, 1978–2013 189
3.5.10 Labour force participation rates (%), males
and females aged 15–24 years, Australia, 1978–2013 190
3.5.11 Incidence of male and female youth long-term
unemployment (%), Australia, 1978–2012 190
3.5.12 GDP growth rate (% seasonally adjusted)
Australia, 1978–2012 192
3.5.13 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
3.5.16 Part-time earnings ratios, females aged 15–19
and 20–24 years, Australia, 1990–2012 195
3.5.17 Male youth unemployment rates (%) and the real
minimum wage (AUD), Australia, 1998–2013 195
3.5.18 Female youth unemployment rates and the real
minimum wage, Australia, 1998–2012 196
3.5.19 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
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 311
4.5.1 Male and female full time employment 1979–1998
(1983 = 100) 312
4.5.2 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
4.5.4b Unemployment rates: with and without post school
qualifications 315
