Unemployment in Australia : duration, experience and recurrent spells / P.K. Trivedi & G.M. Baker.

Abstract

Using a parametric estimation technique on Australian labour force survey data, this paper begins by estimating the average completed duration of unemployment spells for several age and sex categories. It shows that by this measure duration has been increasing steadily since 1972 and both males and females can expect to spend three to four months unemployed. This measure, though high, is still an underestimate when the proportion of recurrent spells is high, as it is in Australia. It is shown that estimates which allow for recurrent spells can be made using data from the two Australian Bureau of Statistics collections Persons Looking for Work and Labour Foroe Experience. These estimates indicate that new entrants to unemployment in 1981 could expect to spend between five and six months unemployed. The same picture emerges for unemployed teenagers though there are two additional factors of interest. They are that contrary to current economic thought, teenagers may on average be unemployed for longer periods per spell and may have less experience of recurrent spells than their adult counterparts. The paper then uses the calculated durations to show that though the high level of unemployment can be accounted for by high inflows, any change in the unemployment rate is dominated by changes in the duration of unemployment The clear implication of this paper is that whether one refers to males and females or to teenagers and adults, the new entrant to unemployment can expect to be unemployed for nearly six months and the single most important factor in changes in the rate of unemployment is the duration of unemployment. Show more