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Regional Labour Market Adjustment to Competition Policy Reforms: A Dynamic CGE Framework for Assessment

James Giesecke and John Madden ()

Australian Journal of Labour Economics (AJLE), 2003, vol. 6, issue 3, 409-433

Abstract: In this paper we investigate the impact on regional labour markets of an increase in primary factor productivity in the Utilities sector. We conjecture that such an increase in productivity is illustrative of the direct effects of national competition policy (NCP). We compute, at the regional level, indices of net labour inputs that are lost from such a productivity shock, finding that the direct effects of NCP involve significant labour market adjustment costs. However, those critics of competition policy reforms who have focussed on adjustment costs have ignored important general equilibrium effects such as the mitigation of adjustment costs in other industries, and, in particular, the effects on labour market adjustment from state government fiscal reactions. We also find that, so long as these general equilibrium effects are modelled, policy makers interested in regional adjustment costs can use indices of the change in regional employment and unemployment as good proxies for the extent of regional labour market adjustment costs.

Keywords: Urban, Rural, and Regional Economics: Regional Migration; Regional Labor Markets; Population General Regional Economics: Econometric and Input-Output Models; Other Models Computable and Other Applied General Equilibrium Models Mobility, Unemployment, and Vacancies: General Technological Change: Government Policy (search for similar items in EconPapers)
JEL-codes: R23 R15 D58 J60 O38 (search for similar items in EconPapers)
Date: 2003
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Handle: RePEc:ozl:journl:v:6:y:2003:i:3:p:409-433