Australia's unemployment problem

A number of Australian studies have provided microeconomic and macroeconomi c perspectives on the causes of, and solutions to, Australia's unemployment problem. This paper provides an evaluation of these studies. Several impor tant findings can he noted. First, from the cross-sectional studies economi sts have gained a good understanding of the factors contributing to a high probability of unemployment. Effective use is currently being made of this information. Second, there is general consensus from the time-series studie s regarding the estimates of the aggregate labour demand wage and output el asticities. In addition, it has been widely acknowledged that lower real wa ges and economic growth would help reduce the high rate of unemployment. De spite the information available we are making slow progress towards reducin g the unemployment rate. This may be due to political reasons or because we are unsure of how to deliver the wage cuts and faster rates of economic gr owth presented as solutions to the unemployment problem.