Where is full employment?

Ian McDonald ()

MPRA Paper from University Library of Munich, Germany

Abstract: Unemployment in Australia is now at its lowest in over 30 years. This experience of low rates of unemployment has prompted a number of statements that the Australian economy is at or very close to full employment. However, even though unemployment is low in comparison with the previous 30 years, it is greater than the rates experienced in the 1950s and 1960s, during which the average was slightly below two per cent. Furthermore, the 4.4 per cent rate of unemployment in April 2007 included 84,000 who had been unemployed for more than a year. These doubts about whether the Australian economy is currently at full employment are supported by findings of a body of research reported in this paper. This research suggests that, given current policy settings on labour market regulation, microeconomic reform and welfare support, full employment may occur at a rate of unemployment as low as 2.5 per cent. The estimation of this low rate of unemployment is based on a model of a range of equilibrium rates of unemployment.

Keywords: full employment; range of equilibria; Keynesian economics (search for similar items in EconPapers)
JEL-codes: E0 (search for similar items in EconPapers)
Date: 2007-07
New Economics Papers: this item is included in nep-lab and nep-mac
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Published in Dialogue 2.26(2007): pp. 81-92

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Working Paper: Where Is Full Employment? (2007)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:5404

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