The Queensland Labour Market: An Empirical Analysis of Labour Supply and Demand
This paper by Patrick Wildie, Queensland Treasury was presented at the 27th Annual Conference of Economists, October 1998.
Classical labour market theory suggests that, as in the market for any particular commodity, the interaction of labour demand and supply determines the quantity of labour sold (amount of labour employed) and its price (the wage rate). However, for policy-makers and forecasters, it is not merely the potential equilibrium levels of wages and employment that are of interest but, rather, the manner in which a particular labour market will respond to changes in the various determinants of labour demand and supply (Hamermesh and Rees, 1988, p. 165).
Therefore, in order for a labour market model to be suitable for both forecasting and policy simulation, it is essential that individual labour demand and supply models be specified in a manner which helps explain any unique characteristics of the particular labour market under consideration (Nickell, 1984, pp 14-15). This approach to labour market modelling was found to be particularly relevant in developing the Queensland Treasury’s Macroeconometric Model (QMEM), due to the significant structural differences that have evolved between labour markets in Queensland and the rest of Australia in recent years.
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Last reviewed: Dec 20, 2006, Last modified: Dec 12, 2006
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