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Melbourne Institute News September 2009 ISSN 1442-9500 (print)

ISSN 1442-9519 (online)

Print Post Approved PP381667/01204

Issue 25

HILDA Conference There were 54 presenters, including key international and national experts, at the 2009 HILDA Survey Research Conference which was held on 16 and 17 July at the University of Melbourne. It was attended by over 200 delegates. Attendees at the 2009 HILDA Survey Research Conference

Forthcoming Economic and Social Outlook Conference 2009 The sixth Economic and Social Outlook Conference will be jointly hosted by the Melbourne Institute and The Australian on 5 and 6 November 2009. Registrations can now be made to attend this conference. Page 4

Information on the ASEAN Community A report is now available on the Association of Southeast Asian Nations (ASEAN) Community Progress Monitoring System for the period 2003 to 2005. Page 5

Economics Forum: China and the Global Financial Crisis China’s huge monetary and fiscal response to the current global financial crisis, and its effects on China’s interaction with the international economy, was discussed at the Melbourne Institute Economics Forum in July. Page 6

Professor Stephen Sedgwick welcomed The Hon Bill Shorten MP, Parliamentary Secretary for Disabilities and Children’s Services and Parliamentary Secretary for Victorian Bushfire Reconstruction. In his opening address, Minister Shorten spoke of the Government’s commitment to longitudinal research. Competition for spots on the conference program was intense, with 35 papers selected — all reporting findings from analyses of data from the HILDA Survey. The conference attracted two internationally renowned keynote speakers: Professor Robert Moffitt (Krieger-Eisenhower Professor of Economics, Johns Hopkins University) spoke about the continued income inequality in the United States as measured by the Michigan Panel Study on Income Dynamics (PSID), which has now been running for nearly 30 years; and Professor Stephen Pudney (Director, ESRC Research Centre on Micro-Social Change, Institute for Social and Economic Research, The University of Essex) spoke about survey response error and the importance of collecting contextual information during the interview process. The guest speaker at the conference dinner was Professor Bob Gregory, Emeritus Professor, Economics Program, Research School of Social Sciences, The Australian National University, and recipient of an honorary doctorate from the University of Melbourne. Continued on page 2 Page 1 - Melbourne Institute of Applied Economic and Social Research

HILDA Conference


headed by a person in ill-health are more likely to be in poverty compared with families headed by a person with good health. Community Participation and Wellbeing Dr Helen Berry and Ms Jennifer Welsh of the Australian National University found that community participation and having social networks are very important in promoting wellbeing and preventing and treating mental health problems. The findings confirm that there are social, economic and health benefits to be gained for happy individuals with strong networks. From left: Professor Mark Wooden, The Hon Bill Shorten MP and Professor Stephen Sedgwick.

The following summaries demonstrate the breadth of subjects covered in the conference papers. Occupation and Personality Professor Deborah Cobb-Clark and Ms Michelle Tan of the Australian National University found that a person’s personality type and gender can play a significant role in the kind of occupation they choose, but overall, occupational segregation plays a minor role in relative wage disparities. Women earn lower wages on average not because they work in different occupations than men, but rather because they earn less than their male colleagues employed in the same occupation. Differences in qualifications and skills between men and women (within the same occupation) can only account for one-quarter of the gender wage gap, leaving a substantial portion of the wage gap unexplained. Precarious Employment and Mental Health Professor Sue Richardson and Dr Guangyu Zhang of Flinders University found no robust evidence that being employed part-time or on fixed-term contracts was harmful to the self-rated mental health of women or men in Australia. However, results showed it is not good for the mental health of men who work full-time but on casual terms — albeit this represents only 7 per cent of male employees. Health and Poverty Dr Hielke Buddelmeyer and Dr Lixin Cai of the Melbourne Institute examined the joint dynamics of health and poverty of Australian families. The results indicate that the causality runs both ways and that families

Job–Life Relationship of Australian Immigrants Ms Weiping Kostenko of the Melbourne Institute examined the job–life relationship of Australian immigrants and found that the attainment of employment, and whether it is skilled versus unskilled work, has a significant positive effect on male immigrants’ subjective wellbeing. Among female immigrants, this effect only exists for well-educated immigrants, and their subjective wellbeing is impeded by challenges to maintain a work–family balance. Marital Instability Professor Bruce Chapman and Dr Rebecca Kippen of the Australian National University, and Dr Peng Yu of the Department of Families, Housing, Community Services and Indigenous Affairs, tracked couples who were married or co-resident during the period 2001– 2007. They identified factors associated with those who remained together compared with those who divorced or separated. Factors found to not significantly affect separation risk included the number and age of resident children, the wife’s employment status, and the husband’s and wife’s years in paid employment. Repartnering Dr Ann Evans and Dr Edith Gray of the Australian National University and Dr Alexandra Skew of the University of Essex researched the likelihood of people repartnering in a new relationship. They found that within five years of becoming single, an estimated 43 per cent of the Australian sample had entered a new relationship, most commonly cohabitation. They also found that young resident children reduce the incidence of repartnering in Australia, but not in the United Kingdom.

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Low-Paid Employment Dr Hielke Buddelmeyer, Dr Wang-Sheng Lee and Professor Mark Wooden of the Melbourne Institute examined whether low-paid jobs in Australia reduce or exacerbate the likelihood of people becoming unemployed in the future. The results indicate that prior low-paid employment experiences have only a modest effect on the probability of experiencing unemployment in the future.

The HILDA Survey is Australia’s only large-scale nationally representative longitudinal household panel survey which interviews the same households and individuals each year. In each of the seven waves of research, the survey has interviewed over 12,000 individuals. The conference papers are available on the Melbourne Institute website at < conf2009papers.htm>.

Other Papers Topics covered by the other conference papers included: the impact of qualifications and work-related training on employment; work–life harmonisation; dynamics of female labour supply; work–life tension and its impact on the work hours of Australian mothers in paid work; lone mothers’ employment; the retirement– consumption puzzle; workforce participation of older people; household asset portfolio diversification; housing affordability dynamics; marital loss and mental health; interrelated dynamics of health and poverty; income and happiness; and social participation of youth growing up with disability. The HILDA Survey project was initiated and is funded by the Australian Government Department of Families, Housing, Community Services and Indigenous Affairs and is managed by the Melbourne Institute.

Pictured at the Plenary Session, from left: Chair: Mrs Carol Ey, Branch Manager, Research and Analysis, Department of Families, Housing, Community Services and Indigenous Affairs. Speaker: Professor Steve Pudney, Director, ESRC Research Centre on MicroSocial Change, Institute for Social and Economic Research, The University of Essex. Speaker: Professor Mark Wooden, Director, HILDA Survey, Melbourne Institute, and Acting Director, Melbourne Institute (since 1 August 2009).

MABEL Survey Update There has been a promising response rate of completed questionnaires received in the second wave of the MABEL longitudinal survey of Australian doctors — Medicine in Australia: Balancing Employment and Life. After only four to five weeks since Wave 2 questionnaires were sent out, around 50 per cent of participating doctors from Wave 1 have responded, plus 12 per cent of the additional ‘top-up’ doctors. The MABEL survey examines the determinants of doctors’ hours worked, participation and geographic mobility, and is conducted by the Melbourne Institute in collaboration with Monash University. Analysis continues to be undertaken on Wave 1 MABEL survey data collected from over 10,500 doctors surveyed in 2008. A number of papers are under preparation and Wave 1 data are on schedule to be ready for release later this year. The MABEL study is funded by a Health Services Research Grant from the National Health and Medical Research Council (NHMRC). Further information on the MABEL project is provided at the website <>. Enquiries can be directed to the Principal Investigator, Professor Tony Scott, on (03) 8344 2115 or by email <>.

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Forthcoming Economic and Social Outlook Conference 2009 The sixth Economic and Social Outlook Conference, The Road to Recovery: Restoring Prosperity after the Crisis, will be held on Thursday 5 and Friday 6 November 2009 at the University of Melbourne. Registrations can now be made to attend the Economic and Social Outlook Conference jointly hosted by the Melbourne Institute and The Australian. The conference, widely regarded as the nation’s premiere economic and social public policy forum, brings together leading politicians, bureaucrats, academics and representatives of non-government organisations. It also provides attendees with strong networking opportunities. The quality speakers at the conference are listed in the program on our website at <www.melbourneinstitute. com/conf2009/program.html>. Distinguished speakers will include: Mr Gary Banks AO, Chairman, Productivity Commission Professor Ross Garnaut AO, Vice-Chancellor’s Fellow and Professorial Research Fellow, The University of Melbourne The Hon Julia Gillard MP, Deputy Prime Minister Mr Chris Richardson, Director, Consulting, Access Economics The Hon Wayne Swan MP, Commonwealth Treasurer The Hon Lindsay Tanner MP, Minister for Finance and Deregulation The Hon Malcolm Turnbull MP, Leader of the Opposition Senator the Hon Penny Wong, Minister for Climate Change and Water.

The Gala Dinner will be held on 5 November at the Melbourne Museum. The speaker will be Mr Glenn Stevens, Governor, Reserve Bank of Australia.

The conference program will facilitate a wide-ranging debate on major current economic and social policy issues on managing recovery from the global financial crisis and addressing how Australia can be best placed to meet its longer term challenges. These include the social issues facing the newly unemployed and the socially excluded; the financial crisis impact on managing Australia’s terms of trade; the adequacy of regulation; the right approach to pricing carbon emissions; closing the gap in outcomes achieved for indigenous Australians; maximising health and education standards; achieving affordable housing; labour skills issues; and how to best achieve an environmentally friendly future. People wishing to attend should complete the conference registration form which can be found on our website at <> and then send it to the Melbourne Institute by fax to (03) 8344 2111 or by email to <>. Enquiries about the conference can be made by contacting the Melbourne Institute Functions Assistant, Ms Alice Hope, on (03) 8344 2149, or by email <>.

Australian Economic Review The latest issue of the Melbourne Institute’s quarterly journal, The Australian Economic Review (vol. 42, no. 3), will be released in September 2009. The lead article in the latest Australian Economic Review is ‘What Happened to Australia’s Productivity Surge?’ by Ben Dolman. Contributed articles in the September issue include: ‘Government Subsidies for Professional Team Sports in Australia’ by John K. Wilson and Richard Pomfret; ‘Children, Labour Supply and Child Care: Challenges for Empirical Analysis’ by Guyonne Kalb; and ‘Changes in Poverty Rates during the Howard Era’ by Joan R. Rodgers, Peter Siminski and James Bishop. The Policy Forum section comprises five articles relating to household debt, including ‘Household Debt: Is It a Liability?’ by Ross Williams, and ‘Household Debt in Australia: The Looming Crisis that Isn’t’ by Roger Wilkins and Mark Wooden. In the ‘For the Student’ section, Ross Booth has contributed an article on ‘Sports Economics’. This field of economics includes microeconomic aspects of player labour markets, and the economic impact of sporting mega-events. More information on the Australian Economic Review can be found on the Melbourne Institute’s website at <www.melbourneinstitute. com>. Page 4 - Melbourne Institute of Applied Economic and Social Research

Melbourne Institute — Australia’s Future Tax and Transfer Policy Conference The Australia’s Future Tax System Review Panel hosted a two-day conference in June 2009 on the reform of Australia’s tax and transfer system. The Melbourne Institute organised the conference for the Tax Review Panel to provide an opportunity for international experts and a range of academics and stakeholders to debate leading-edge tax and transfer policy issues and to contribute to the work of the Review Panel in an informal setting. Approximately 150 people attended the conference on Thursday 18 and Friday 19 June 2009 at the University of Melbourne. The program included a first-class selection of keynote speakers and discussants, drawn from across the world, who presented papers in the following nine sessions: Opportunities and Challenges: Tax and Transfer Reform Directions in Tax and Transfer Theory Commonwealth–State Taxation Aspects of the Taxation of Savings and Wealth: Housing and Pensions The Tax-Transfer System and Labour Supply Environment The Taxation of Capital Income (including Business Taxation) Taxing Specific Goods and Services (including Alcohol and Tobacco) A Citizen-Centred Tax and Transfer System (Complexity and Compliance). The conference papers and the full list of speakers and discussants are available at <>.

Information on the ASEAN Community A recently released report, ASEAN Community Progress Monitoring System, shows the progress of the Association of Southeast Asian Nations (ASEAN) member countries towards achieving the goals of two pillars of the ASEAN Community: the ASEAN Economic Community and the ASEAN Socio-Cultural Community. The main goals of these pillars are (i) to enhance overall material wellbeing through trade, investment and skilled labour, and this includes gains acquired through economies of scale and specialisation, plus gains from technology transfer and risk diversification; and (ii) to deliver better social outcomes by introducing social protection systems, sustainable development strategies and better social governance. Key economic findings include an improved GDP per capita for lower income countries; faster labour productivity growth in the more advanced member countries of Malaysia, Singapore and Thailand; large increases in the volume of commercial service trade; and significant increases in intra-ASEAN direct investment for many priority sectors. Key socio-cultural findings include a general rise in living standards revealed through declining rates of poverty; enhanced life expectancy and a higher rate of literacy; a decline in the percentage of people living in absolute poverty; and an improvement in environmental sustainability. The ten member countries of ASEAN are Brunei Darussalam, Cambodia, Indonesia, Lao PDR, Malaysia, Myanmar, Philippines, Singapore, Thailand and Vietnam. The report involved extensive face-to-face consultations with about 150 stakeholders in each of the ASEAN countries. The project is funded by AusAID. The report is available to download from the Melbourne Institute’s website at < publications/reports/asean/>. For enquiries about this ASEAN Community report, please contact Dr Alfons Palangkaraya, Senior Research Fellow, Melbourne Institute, by email <>. Page 5 - Melbourne Institute of Applied Economic and Social Research

Melbourne Institute Economics Forum: China and the Global Financial Crisis The quarterly Melbourne Institute Economics Forum, held at the Grand Hyatt Melbourne on 20 July 2009, discussed China’s huge monetary and fiscal response to the current global financial crisis, and its effects on China’s interaction with the international economy. Professor Yiping Huang (Professor of Economics, China Centre of Economic Research, Peking University, and formerly Citibank’s Chief Economist for Asia) spoke on how China’s economic growth is expected to be about 8 per cent over the next two years. He said that 90 per cent of China’s growth now relied on bank lending to the state-owned sector, rather than on the government’s direct fiscal stimulus spending, and that after the end of 2010 China would need to rely on other avenues for growth besides investment. Professor Huang expected that, given the economic problems of the United States, the strong past growth in Chinese exports would fall, and that unemployment would increase, especially within the labour-intensive export sector. Dr Ligang Song (Director of the China Economy and Business Programme at the Australian National University) said that China’s economy produces 17 per cent of the global manufacturing output. He outlined that driving forces for this output in China include labour, technology, institutional change and innovation, decentralisation from central government to local government, and rapid urbanisation (now at 35 per cent). Dr Song spoke of how the ageing population is a major challenge. Professor Ross Garnaut (Vice-Chancellor’s Fellow and Professorial Research Fellow at the University of Melbourne) told the forum that the global banking system could no longer smoothly cover huge trade surpluses in Asia and huge deficits in the West, so Asians would need to spend more and Westerners would need to save more.

Also speaking at the forum, Professor Xiao Geng (Director of the Brookings-Tsinghua Centre for Public Policy Beijing) said that many of the largest firms in China are 70 per cent owned by the state. “The state still has tremendous influence on the largest and most important sectors of China’s economy,” he said. Professor Geng added that Chinese household consumption, as a share of China’s GDP, had slumped from 52 per cent to about 40 per cent in the past decade, whilst the corporate sector, led by state-owned companies, and the government had increased their share. The forum was chaired by Mr Tony Cole (Business Leader for Investment Consulting in Asia Pacific, Mercer (Australia) Pty Ltd).

Pictured at the Economics Forum, from left: Professor Yiping Huang, Professor of Economics, China Centre of Economic Research, Peking University. Sir Rabbie Namaliu, former Prime Minister of Papua New Guinea (1988 to 1992) and Treasurer and Foreign Minister of PNG (2002 to 2006). Professor Ross Garnaut, Vice-Chancellor’s Fellow and Professorial Research Fellow, The University of Melbourne. Dr Ligang Song, Director of the China Economy and Business Programme, The Australian National University. Professor Xiao Geng, Director of the Brookings-Tsinghua Centre for Public Policy Beijing.

Professor Garnaut added that as Australia has an important trade relationship with China, we should not focus on annual price negotiations but should develop structural arrangements such as the development of a “Shanghai commodity market as a place for pricing northeast Asian minerals”.

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Child Care and Parents’ Labour Supply: Current Issues for Australia ‘Children, Labour Supply and Child Care: Challenges for Empirical Analysis’, an article published in the September 2009 issue of the Australian Economic Review, provides an overview of important issues on how the use of child care is integral in enabling the primary carer in a household to participate in the labour force. The author, Associate Professor Guyonne Kalb (Director of the Labour Economics and Social Policy research program at the Melbourne Institute), focuses on Australian policy and results from research in her discussion of the analytical challenges and areas requiring more study. She found that the degree to which child-care costs are expected to reduce the participation of mothers in the labour force differs substantially between households. “Not surprisingly, those most affected are on low wages and have preschool children” said Associate Professor Kalb. Associate Professor Kalb notes that analysis of the effect of costs or fees on child-care demand and labour supply is complicated by the fact that people’s decisions can be influenced by the availability and quality of child-care from which to choose. Analysis is further complicated because data are not available on many of the other relevant factors in child-care choices — such as the proximity to support from close relatives. In the economics literature relatively little attention is paid to the effect of child-care use on child development. Nevertheless, this may be an important factor in the decision to use child care and is likely to be related to the quality of child care. More information on the Australian Economic Review can be found on the Melbourne Institute’s website at <www.melbourneinstitute. com>.

Pacific Rim Innovation Conference 2010 The inaugural Pacific Rim Innovation Conference will be held at the University of Melbourne on Thursday 21 and Friday 22 January 2010. The conference will foster an inter-disciplinary exchange of knowledge by bringing together scholars working on the economics, management and law of innovation. The conference will focus on the effectiveness of intellectual property systems; markets for technology; the strategic management of R&D — within and between firms (for example, ‘open innovation’); government innovation policies; and managing key challenges of the 21st century (for example, climate change, gene patents, nanotechnology). Interested presenters are invited to submit an abstract (maximum 300 words) of their proposed paper by email to <> by 30 September 2009. Proposals will be refereed by the Scientific Committee and applicants should receive a response by 14 October 2009. The event is being organised by the Intellectual Property Research Institute of Australia (IPRIA) at the University of Melbourne, with support from the Institute of Innovation Research (Hitotsubashi University), the NUS

Business School (National University of Singapore) and the University of Auckland Business School. Keynote speakers will include Professor Dietmar Harhoff (Ludwig-Maximilians-Universität München), Professor Rochelle Dreyfuss (New York University), Professor Ivan Png (NUS Business School), Professor Peter Drahos (Australian National University), Professor Joshua Gans* (University of Melbourne) and Professor Bruno Cassiman* (IESE Business School, Barcelona). Further information can be found at < events/conf/default.html>. Registration to attend the conference will commence on 14 October 2009. Enquiries can be made with Ms Michelle Wilson, Executive Officer, IPRIA, on (03) 8344 2153 or by email <>. * These speakers are to be confirmed.

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Recent Melbourne Institute Working Papers 22/09 21/09 20/09 19/09 18/09 17/09 16/09 15/09 14/09

‘Overskilling Dynamics and Education Pathways’ Kostas Mavromaras, Seamus McGuinness and Yin King Fok ‘Does Labour Market Achievement Matter for the Wellbeing of Australian Immigrants? Culture and Gender Differences’ Weiping Kostenko ‘Occupational Transition and Country-of-Origin Effects in the Early Stage Occupational Assimilation of Immigrants: Some Evidence from Australia’ Weiping Kostenko, Mark Harris and Xueyan Zhao ‘A Latent Variable Approach to Forecasting the Unemployment Rate’ Chew Lian Chua, G. C. Lim and Sarantis Tsiaplias ‘Examining Feedback, Momentum and Overreaction in National Equity Markets’ Sarantis Tsiaplias ‘Hospital Markets and the Effect of Competition on Quality’ A. Palangkaraya and J. Yong ‘Hospital Competition, Technical Efficiency, and Quality’ C. L. Chua, A. Palangkaraya and J. Yong ‘The Theory of the Fiscal Stimulus: How Will a Debt-Financed Stimulus Affect the Future?’ W. Max Corden ‘Intergenerational Correlation of Labour Market Outcomes’ Nicolas Hérault and Guyonne Kalb

Working Papers can be download for free from <>. If you would like to receive an email notification when new Working Papers become available, contact the Melbourne Institute on <>.

Working Paper on the Occupational Assimilation of Immigrants The Working Paper ‘Occupational Transition and Country-of-Origin Effects in the Early Stage Occupational Assimilation of Immigrants: Some Evidence from Australia’ addresses the occupational attainment of recent immigrants in order to study their early stage assimilation into the Australian labour market. The authors, Ms Weiping Kostenko (Melbourne Institute), Dr Mark Harris and Associate Professor Xueyan Zhao (Monash University), conclude that the transferability of migrants’ knowledge and skills is affected by cultural and social backgrounds. Their analysis finds that English proficiency is crucial for obtaining professional and clerical work, and suggests that the points-test system is useful in screening potentially economic-beneficial migrants. The authors conclude that non-Western migrants are less likely to be retained in higher level jobs relative to their Western counterparts; for example, the retention rate of Western professionals is approximately 17 per cent higher than that of their non-Western counterparts. Another finding is that whilst the Australian economy is in need of skilled labour, there is only a 38 per cent chance that former tradesmen remain in their occupation, post-migration. The authors suggest that a bridging program towards accreditation may be useful to help overseas-qualified tradesmen return to their former occupations. The Working paper (20/09) is available from the Melbourne Institute’s website at <>.

Farewell Message from Professor Stephen Sedgwick My past two years at the Melbourne Institute have provided a wonderful opportunity to work with a very talented team of quality people who are committed to conducting high quality research that advances our understanding of our economy and society. I thank all members of the Melbourne Institute — professional and academic staff alike — for their commitment, enthusiasm and professionalism during these past two years. Sincere thanks also to our sponsors, external stakeholders, and a large number (too large to enumerate) of individuals and organisations — public, private, not-for-profit, and those within the University of Melbourne. I wish my successor and the team at the Melbourne Institute every success in sustaining its proud tradition of making influential evidence-based contributions to debates about contemporary public policy issues. Stephen Sedgwick

Melbourne Institute News Views expressed by the contributors to Melbourne Institute News are not necessarily endorsed or approved by the Melbourne Institute. Neither the Melbourne Institute nor the Editor of Melbourne Institute News accepts any responsibility for the content or accuracy of information contained in this publication. Editor: Cliff Howard tel: (03) 8344 2154, fax: (03) 8344 2111, email: <>. Sub-Editor: Nellie Lentini. Contributors: Professor Ross Garnaut, Ms Penny Hope, Associate Professor Guyonne Kalb, Ms Weiping Kostenko, Dr Alfons Palangkaraya, Professor Tony Scott, Professor Stephen Sedgwick, Associate Professor Beth Webster, Professor Mark Wooden.

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#25 September 2009 - Melbourne Institute News  

Issue 25 - September 2009 - Melbourne Institute News

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