Australian Labour Market Dynamics Across the Ages

20 Pages Posted: 5 Feb 2013

See all articles by Natalia Ponomareva

Natalia Ponomareva

Macquarie University - Division of Economic and Financial Studies; Macquarie University, Macquarie Business School

Jeffrey Sheen

Macquarie University; Financial Research Network (FIRN); Macquarie University, Macquarie Business School

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

Ponomareva, Natalia and Sheen, Jeffrey, Australian Labour Market Dynamics Across the Ages (February 5, 2013). Available at SSRN: https://ssrn.com/abstract=2211937 or http://dx.doi.org/10.2139/ssrn.2211937

Natalia Ponomareva

Macquarie University - Division of Economic and Financial Studies ( email )

United States

Macquarie University, Macquarie Business School ( email )

New South Wales 2109
Australia

Jeffrey Sheen (Contact Author)

Macquarie University ( email )

Department of Economics
Macquarie University
Sydney, NSW 2109
Australia
+61 2 9850 7287 (Phone)
+61 2 9850 8324 (Fax)

Financial Research Network (FIRN) ( email )

C/- University of Queensland Business School
St Lucia, 4071 Brisbane
Queensland
Australia

Macquarie University, Macquarie Business School ( email )

New South Wales 2109
Australia

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