Australian Labour Market Dynamics Across the Ages
20 Pages Posted: 5 Feb 2013
Date Written: February 5, 2013
Abstract
Transition probabilities between four labour market states (full-time employment, part-time employment, unemployment and inactive) for three age groups (the young, mature and old) are calculated using monthly gross flow data for Australia from October 1997 to May 2012. We determine the responses of the different groups to phases of the business cycle by estimating four unobserved common dynamic factors that drive the age group transitions. Job-finding and job-losing factors were significantly affected by the business cycle variable. Impulse responses to a business cycle shock show that both job finding and job loss matter, with the former more important. Gross flows of the old and young were much more affected by job finding, but the young were disproportionately represented in part-time job loss to unemployment, and the old to inactive. Part-time job flows (particularly by the young) are much more important cyclically than full-time ones.
Keywords: labour market flows, unemployment, transition probabilities, business cycles, dynamic factor model, impulse responses, age groups
JEL Classification: J21, C38
Suggested Citation: Suggested Citation
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