Understanding the rising trend in female labour force participation, TTPI Working Paper 5/2020

By Nicolas Herault & Guyonne Kalb (University of Melbourne)

Abstract:

Female labour force participation has increased tremendously since World War II in developed countries. Prior research provides piecemeal evidence identifying some drivers of change but largely fails to present a consistent story. Using a rare combination of data and modelling capacity available in Australia, we develop a new decomposition approach to explain rising female labour force participation since the mid-1990s. The approach allows us to identify, for the first time, the role of tax and transfer policy reforms as well as three other factors that have been shown to matter by earlier studies. These are (i) changes in real wages, (ii) population composition changes, and (iii) changes in labour supply preference parameters. A key result is that –despite the ongoing emphasis of public policy on improved work incentives for women in Australia and elsewhere– changes in financial incentives due to tax and transfer policy reforms have contributed relatively little to achieve these large increases in participation. Instead, the other three factors drive the increased female labour force participation.

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Sectoral employment dynamics In Australia, TTPI Working Paper 4/2020

By Heather Anderson, Giovanni Gaggiano, Farshid Vahid-Araghi & Benjamin Wong (Monash University)

Abstract:

In the aftermath of the covid-19 pandemic, the prevention of further decline in aggregate employment and turning it around are high on the agenda of policymakers. To this end, it is imperative to have a disaggregated model of employment, given the unequal effects of covid-19 on employment in different sectors of the economy. In this paper we develop a multivariate time series model of employment in 19 sectors of the Australian economy. We provide the predictions of this model conditional on various scenarios that are based on the most recent quantitative information about sectoral employment in Australia. We estimate that the drop in total employment in the second quarter of 2020 will be in between 7 and 13 percentage points, compared to the second quarter of 2019. We also use this model to determine the long-run effect of a 1% increase in economic activity in any chosen sector on aggregate employment. Our findings point to manufacturing and construction sectors as those that might generate the largest positive spillovers for the rest of the economy. Moreover, we provide an interactive web-based app as well as an interactive spreadsheet that produce our model’s 5-year forecasts based on any user-specifed scenario for the current and following three quarters. As the covid-19 pandemic evolves and some restrictions are safely lifted or other restrictions become necessary, the sectoral employment multipliers together with the interactive tools produced here will provide useful information for policymakers.

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