Melbourne Institute Working Paper Series Database (1984 - 2010)

Melbourne Institute Working Paper No. 22/2003

Unemployment Policy: Lessons from Economic Analysis

by

John Freebairn and Peter Dawkins

Date: August 2003

Abstract: This paper summarises a large project involving many studies to evaluate the effects on employment and unemployment in Australia of macroeconomic, wage restraint, taxation and social security systems, and of education and training policies. One set of studies finds that the NAIRU is an uncertain estimated number, others suggest a number or a range of long term equilibrium unemployment rates, and by implication the lower bound to achievable non-inflationary unemployment rate is uncertain. Simulations with the TRYM, MONASH and VAR models find that stimulatory macroeconomic policies and wage restraint policies increase employment in the short run. Simulations with the MITTS and VAR models, and comparisons of employment experiences across countries, find that changes in tax and social security systems, as they alter incentives, affect labour supply and job search decisions, and employment.

 

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