2021
Erin Clarke: The 2018 Child Care Subsidy: Demand for Childcare and Maternal Labour Supply in Australia
ABSTRACT
I evaluate the effect of childcare subsidy reform on maternal labour supply and household’s childcare demand. Using HILDA survey data, I exploit a policy reform that reduced the cost of childcare for low-to middle-income households in Australia. Using a difference-in-differences design, I estimate the causal impact of the reform on household demand for childcare and the labour supply of mothers with preschool-aged children. Overall, I find significant positive effects of the reform on labour supply and childcare demand, with women in lower socio-economic groups seeing the strongest effects. My findings are in line with simple theoretical predictions and complement the existing empirical literature surrounding the relationship between maternal employment and childcare use. I also provide further insight into the labour supply and childcare demand decisions of Australian mothers with young children, which otherwise remains an unresolved issue.
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Tan Dat Huynh: The Australian real exchange rate model and a Brainard-based (1967) policy recommendation
ABSTRACT
This thesis constructs a single equation error correction model to forecast the Australian dollar real trade weight index. It aims to confirm the long-run relationship between the exchange rate and the terms of trade through its in-sample explanatory power and out-of-sample forecast ability. It also determines which type of world interest rate should be used for the real interest rate differential variable, and, which particular type of commodity price sub-indices has the largest impact on the exchange rate. Furthermore, the paper also investigates the significance of the interest rate variable in the model to make a Brainard-based (1967) monetary policy recommendation. The main findings are that the error correction model outperforms random walk at various out-of-sample forecast horizons, the terms of trade and Australian-US yield gap form a long-run cointegrating relationship with the exchange rate, and the most suitable world interest rate to be used is the US interest rate. The error correction model specification is less robust when applying to fellow commodity currencies such as the Canadian and New Zealand Dollar. Finally, the model recommends the Reserve Bank of Australia should be less activist with their monetary policy.
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Alexander Anthony Koutalistras: The Determinants of the Allais Paradox in the Loss Domain Under Expected Utility Theory
ABSTRACT
Since the inception of the Allais Paradox in 1953, there has been a profound effort to uncover its determinants. Is the Allais Paradox a result of the certainty effect, or is something else driving these deviations from expected utility theory? In this paper, I not only test the effectiveness of the certainty effect in explaining violations of expected utility in the loss domain but draw my attention to a more recent phenomenon proposed by Incekara-Hafalir et. al (2020), known as the zero effect. It states that perhaps, rather than an appeal to certainty, violations of expected utility theory are a result of an aversion to zero (Incekara-Hafalir and Stecher, 2012). Using data I obtain from an Amazon Mturk experiment, I adopt the novel Allais-style design proposed by Incekara-Hafalir et al. (2020), to determine which effect is more reasonable in outlining expected utility violations in the loss domain. I find that when I focus on Allais’ original, 2 common consequence design, the decisions made by participants are comparable to prior literature in terms of expected utility theory consistency. Conversely, when I consider patterns containing a variety of common consequences under Incekara-Hafalir et al.’s (2020) novel6-lottery design, I find much lower rates of expected utility consistency; possibly a result of an increase in the number of lotteries presented, errors, or inattention. If I adopt Allais’ original design but include one additional common consequence, I find strong support for the zero and certainty effects respectively, as well as the reverse certainty effect. Nonetheless, due to both the common consequence effect pattern and the reverse pattern to the common consequence effect being highly frequent, there is a strong possibility that participants made a high amount of random choices.
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Bobby King See Lau: The Lure of Leadership: Modelling leader-follower games with RNNs
ABSTRACT
A series of recurrent neural networks and random forests with varying specifications were trained on data from laboratory experiments that stripped away common forms of coordination and communication. In general, these specifications-imposed constraints on the models’ parametrization which in tandem with the experimental setting allowed certain inferences to be made on the player’ decision-making process. The main findings were unexpected: it would appear that this cognitive process is in fact stationary across time, covariates, and settings. Should these outcomes be substantiated externally, it would pose significant and positive implications for the modelling of social dynamics in general. Namely, the ability to assume stationarity would simplify behavioural models by a non-trivial margin—not to mention the ramifications for the extrapolation of results much beyond the observed domain.
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David Xin Lu: The effects of mental health differences on risk, time, and ambiguity preferences
ABSTRACT
Common mental illnesses such as depression and anxiety have a range of psychiatric and emotional symptoms that may affect how individuals make decisions. This study seeks test whether differences in mental health affect three key economic preferences: risk; time; and ambiguity, a type of risk preference. I utilise a newly collected twin dataset and implement a twin fixed effect model. The empirical strategy takes advantage of within-twin variation in mental health to provide a more suitable counterfactual group than previous studies. The estimated effects of mental illness on risk and ambiguity preference measures are small and statistically insignificant. While there are some statistically significant results for time preference measures that indicates that mental illness causes greater impatience and future bias, the results are not robust to multiple hypothesis testing and sensitive to different modelling of the independent variable. These results suggest that preferences are stable with mental health differences.
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Rakesh Pillai: The Impact of COVID-19 on Student Experience and Expectations Evidence through a Survey: Australia
ABSTRACT
To understand the impact of COVID-19 on university students experience in Australia, we replicate Aucejo, French, Araya, and Zafar's (2020) paper. We surveyed 152 students at the University of Technology Sydney. The study uses subjective treatment effects designed to uncover the causal impact of the pandemic on students current and expected outcomes. Overall, the results show adverse effects in the majority of dimensions. For example, 33% of students reported a negative casual effect in study hours, and 23% reported a negative causal effect in academic performance due to COVID-19. Results also demonstrate many areas of heterogeneity. For example, lower median income students make up almost 60% of students who expect to delay graduation and makeup 70% of students who changed majors due to COVID-19. These trends of casual impacts disproportionately hinder students from disadvantaged socioeconomic, low median income backgrounds, and students that lost jobs. With economic shocks produced by COVID-19, we explain distributional effects that occur among different groups. Finally, with the results found in this study and the results of Aucejo, French, Araya, and Zafar's (2020) paper, we distinguish common trends and disparities.
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Ben Robinson: An empirical study of crowding out in Australia using structural VAR models
ABSTRACT
This thesis aims to test the crowding out hypothesis by using structural vector autoregressive (SVAR) models to examine the relationship between government debt and interest rates in Australia between 1993 and 2021. Two government debt measures are used – the primary budget balance as a proportion of GDP, and the growth rate of the amount of securities in the market –and two interest rates are used –the interest rates on 3-year and 10-year government bonds. To fill the gaps identified in the literature, this study accounts for the role of monetary policy and Australia’s position as a relatively small, open economy. The results provide limited support for the crowding out hypothesis, and any positive relationship between government debt and interest rates is found to be smaller than those identified in previous studies.
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Scarlet Shannon: Gender, Seniority, and the Dynamics of Economics Conferences
ABSTRACT
I study whether there are gender and seniority differences in presenters’ time use at a virtual economics conference. I conduct an empirical observational study to examine how the presenters use time in presentations, questions, and answers. I examine whether there are differences in terms of a range of conference session characteristics, such as field contribution and chair characteristics, and speaker characteristics, such as gender, seniority, co-authors, and citations. I compare how time is used amongst the speakers and whether the variables mentioned above influence the time used. I find evidence of seniority differences in presentation lengths and propensity for speakers to go over their time allocation and no gender differences in time use between speakers. I use the dataset and outcome variables to give an up-to-date insight into the current environment of economics and academic economic events.
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Harry Stankovic: Target Displacement of Assault Due to the Lockout Laws
ABSTRACT
Situational Crime Prevention (SCP) measures are policies that aim to reduce a specific crime, often in a specific location. This is achieved by imposing a set of restrictions that would make it impossible or unappealing for a criminal to continue to commit the targeted offence. An issue that arises with the implementation of SCP policies is displacement effects. This thesis analyses the 2014 NSW Alcohol Reforms (Lockout Laws) that was introduced and implemented on the 24th of February 2014. The policy stipulated restrictions specific to two areas: the Sydney CBD Entertainment Precinct, and the Kings Cross Precinct (Lockout Zones). The primary objective was to reduce alcohol-fuelled non-domestic assault. Previous studies find that the policy was successful in reducing non-domestic assault within the Lockout Zones; however, non-domestic assault was displaced to adjacent entertainment precincts. This form of displacement represents spatial displacement, whereby the location of the crime has changed. This thesis seeks to extend the existing research on the Lockout Laws and explore the potential for target displacement resulting in an increase of domestic assault post-policy. This thesis explores various displacement mechanisms and implements a Difference-in-Differences identification strategy to test for them. Overall, this thesis finds no evidence of target displacement effect occurring because of the Lockout Laws.
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Andrew Tse: The Association between Parent and Child Home Ownership
ABSTRACT
Studying intergenerational wealth mobility has been increasingly popular due to the rising importance of wealth and the lack of wealth-related literature. However, the restrictiveness of the data that is used to conduct the analyses on intergenerational wealth mobility is one of the key issues when studying this field. One solution in countering this issue is to focus on home ownership as owner-occupied housing accounts for the greatest proportion of wealth over the last decade. As such, this thesis will study intergenerational home ownership. Replicating the method from Blanden et al. (2021) and using the Household, Income and Labour Dynamics in Australia (HILDA) survey, the baseline association between parental and child home ownership is 0.295. This means that there is an increase of 29.5 percentage points in the possibility of home ownership attainment for the child, given that the child’s parents are homeowners. This result is like the baseline results of Blanden et al. (2021). The lack of Australian literature on potential mechanisms, such as education level and ethnicity, prompts this thesis to study the association under these different mechanisms. However, the results of this thesis demonstrate all mechanisms that are investigated in this thesis are not major factors in driving the raw association between parental and child home ownership.
2020
Christopher Carter: An Estimation of The Labour Market Augmented Phillips Curve for OECD Countries
ABSTRACT
The phenomenon known as the flattening of the Phillips Curve has taken place across multiple countries, prompting the declaration by many studies that it has become flat or even been pronounced dead. While there are many different causes under investigation, this thesis proposes that changes in the fundamental structure of labour markets have been a vital catalyst in the observed decline of the slope of the Phillips Curve. Specifically, the growing precarisation of the labour force and trends in worker bargaining power have altered the underlying composition of many economies. Consequently, it is possible that this has caused the distortion of macroeconomic relationships such as the Phillips Curve. Using OECD data from 1980 onwards, a "Labour Market Augmented Phillips Curve" is estimated for eight OECD countries, where the slope of the Phillips Curve is determined alongside various chosen labour market variables. This paper employs the use of an original synthetic measure of labour precarity as well as time series models to formulate long and short run Phillips Curves. In particular, the constructed labour market index coincides with a flatter Phillips Curve for the US, Australia, Italy, Germany and Japan. Furthermore, the diminished bargaining power of workers in Australia, Italy and Germany and Japan are associated with significant declines in the inflation and unemployment trade-off. The same is true for the growing labour precarity in Japan which has also contributed to a flatter estimated Phillips Curve. This yields clear evidence that these dynamic labour market variables have played a role in the suppression of inflationary reactions to changes in unemployment.
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Cassandra Castle: Individualism and Collectivism as predictors of compliance with COVID-19 public health safety expectations
ABSTRACT
The 2019 coronavirus (COVID-19) pandemic has presented a complex problem to policymakers and researchers. To slow the rate of infection, governments across the world have implemented similar lockdown procedures and COVID-19 behaviour expectations, yet the rates of compliance with these measures have varied significantly across communities. This directly impacts the level of severity required to fight the pandemic and the degree to which these measures negatively impact economic stability. Previous studies have highlighted how culture plays a role in determining values, which impacts decision making and therefore influence responses to social and collective coordination. Our study builds on this literature by developing a survey that explores how cultural dispositions impact public health safety behaviours in NSW. We refer to the Individualism index from Hofstede’s model of culture as our predictor of COVID-19 behaviours. We also present recommendations to improve compliance and reduce the impact of the pandemic. We find that Horizontal Collectivism (HC) is positively associated with social distancing and face mask behaviours, and Vertical Collectivism (VC) is positively linked to increased hand hygiene behaviours. We also find that Horizontal Individualism (HI) is negatively related to social distancing in general. Interestingly, both Vertical Individualism (VI) and Collectivism relate positively to worries about health, whilst high scores of HI indicate lower probabilities of being worried about personal health and the well-being of friends and family. From these findings, we recommend that policymakers spread unifying messages and emphasise the pandemic as a group problem to promote compliance and minimise uncertainty.
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Michael Dyer: An Application of Simplified Dynamic Pricing to EFL Championship Away Tickets
ABSTRACT
Revenue streams for sporting clubs are seemingly very fragile, and dynamic pricing models could be used to aid with the growth of matchday revenue streams and tickets sales over the existing static pricing model favoured by clubs. This paper uses a four-step process to analyse this problem in relation to EFL Championship clubs, beginning with the estimation of match demand and culminating in a revenue and sales comparison between the existing static pricing model and five simplified, hypothetical dynamic pricing models. Revenue was increased in four of the five hypothetical models relative to the static model, however this was mostly the result of an increased starting price. The dynamic pricing models did allow clubs to access demand at different levels of consumer willingness to pay, and are suitable for application by EFL Championship clubs, provided the pricing system is correctly designed.
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Daniel Entsief: The Effect of Birth Order on Cognitive and Non-cognitive Outcomes in Australian Children – An Investigation into the Parental Investment
ABSTRACT
We study the effect of birth order on cognitive and noncognitve skills in children between the ages of 4 to 9 using the Longitudinal Study of Australian Children. Firsborns are more verbally intelligent, emotionally stable, conscientious, and less prone to behavioural issues. Taking advantage of time-use diary data we then investigate the role of parental time investments and parental style as a mechanism of birth order effects and find firstborns to receive more educational time with parents and consume less media. Parents also tend to be less affectionate but more reasonable, hostile, and strict in their parenting of earlier born children. We find evidence that birth order differences may be mediated by parental style to a larger degree than time investments.
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Lliam Harper: Climate Effects on Australian Economic Growth
ABSTRACT
This paper examines the effect the climate and weather have on various sectors of the Australian economy including household, private and government demands as well as total state demand. A panel model is utilised which takes account of seven states and 44 sub-sectors of the economy. Typical micro-panel models, such as fixed effects, struggle to control for large time series data, spillover effects between states and slope heterogeneity leading to inconsistent and biased estimates. The common correlated effects mean group (CCEMG) estimator, developed by Pesaran (2006), allows for dynamic modelling, long times series and cross-sectional dependence in panel models that results in efficient, consistent and unbiased estimates. This paper will estimate the 44 models using both methods demonstrating the shortcomings of the fixed effects model for research of this nature due to the inconsistent and biased results, as well as large changes in magnitude of the estimates between the two models. The results from CCEMG estimation indicate that weather and climate do have a significant impact on total state growth with a 1°C increase in maximum temperature anomaly resulting in a decrease in total state growth by 0.75 percent. Further, an increase in minimum temperature and diurnal temperature anomaly by 1°C, results in total state economic growth increasing by 0.48 percent and 0.62 percent, respectively. Rainfall does not have a statistically significant relationship with total state demand, or the household, private and government sectors. There is also evidence of weather variables affecting sub-sectors such as insurance, food and construction among others.
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Jameson Coombs: Financialisation of the non-financial corporation in Australia – A firm level investigation
ABSTRACT
Notwithstanding the growing literature on financialisation, there is currently little discussion surrounding the presence and implications of financialisation in Australia. This paper evaluates changes in the behaviour of non-financial corporations in Australia, which point to the financialisation of the firm and undertakes an econometric analysis of firm investment to consider the implications of financialisation on investment in Australia. The article finds clear evidence of financialisation of the non-financial firm in Australia, especially among small firms, however, concludes that financialisation does not have considerable implications for investment in Australia, as has been observed overseas. Despite the findings, it appears the manifestation of financialisation is a more recent development of the Australian economy, suggesting the adverse implications of financialisation may soon be realised in Australia, unless adequate steps are taken to address the issue.
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Tomas Kennedy: Estimating Rates of Absolute Income Mobility in Australia
ABSTRACT
The objective of this thesis is to estimate the proportion of Australian-born children of the 1981-1986 birth cohort that go on to earn more income than their parents at roughly the age of 30 – otherwise known as the absolute upward income mobility rate. Unlike relative income mobility, absolute income mobility has been neglected in the literature, particularly in Australia, until recent methodological innovations. Using the innovative copula and marginals approach, ABS survey data, published ATO tax data, and HILDA survey data, this thesis estimates the Australian absolute upward income mobility rate to be 67.69%. This thesis is novel in that it is only the 2nd paper thus far to estimate absolute income mobility for Australia, with the only prior Australian estimates being subject to considerable methodological shortcuts. This estimate for the 1981-1986 cohort is robust to income definitional discrepancies in the methodology, a point of discussion that is neglected in the existing absolute mobility literature. Additionally, this thesis undertakes various counterfactual analyses to simulate the level absolute income mobility under different levels of income inequality and growth.
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Jiarun Li: Characteristics of Bank Failures and Survivors in the Victorian Banking Crisis of 1893
ABSTRACT
This thesis examines the characteristics of bank failures and survivors in the Victorian banking crisis of 1893, which the 1893 banking crisis is the most severe one in Australian history and its epicentre was in Melbourne (Boehm, 1971). A logistic regression model is used to test the hypotheses about banks features which were outlined by Australian economic historians. And this thesis will apply the Calomiris & Mason (1997) methodology to test whether there were asymmetric information-contagion failures in the Victorian banking crisis of 1893. Additionally, credit expansion theories (Schularick & Taylor, 2012) and the Post-Keynesian hypotheses (Minsky, 1982) about banking crisis are also discussed. It is found that banks which its head office was in Melbourne, which had more business in Victoria, less profitable, lower liquidity, lower capital, and higher cumulative loan growth were more likely to fail in the Victorian banking crisis of 1893. Another major finding is that 4 out of 7 bank failures happened owing to asymmetric information-contagion risks, contagion failures did occur in the 1893 Australian context. And it is concluded that the credit expansion theory and Minsky’s financial instability hypothesis apply to the Victorian banking crisis of 1893.
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Michelle Zhang: How far does the apple fall from the tree? Heterogeneity in intergenerational educational mobility across immigrants and natives in Australia
ABSTRACT
This study provides insights into the heterogeneity of intergenerational educational transmission and mobility across population groups in Australia, afforded by the rich HILDA data on child educational outcomes. We find that Non-English-Speaking Background (NESB) migrants parent-child years of education correlation coefficient (0.43) is nearly double that of English-Speaking Background (ESB) migrants (0.22) and Natives (0.22), suggesting strong educational transmission for this population group. Paradoxically, this group also exhibits high relative and absolute educational mobility. Conditional on parents not completing secondary school, NESB children are most likely to complete university (19%), more so than ESB (14%) and Native (10%) children. Moreover, conditional on parents who have completed University, NESB children are most likely (30%) to attain a Masters or Doctorate degree, relative to ESB (10%) and Native (13%) children. Further, we find considerable downward mobility for ESB youth and high immobility of low educational attainment for Native children. This suggests that correlation coefficients, traditionally used to analyse intergenerational educational mobility, conceals a nuanced heterogeneity of educational mobility across population groups, better captured by our measures of analysis.
2019
Michael A. Bleasdale: The impact of regulation on cryptocurrency: An analysis of exchange volume and spillovers between countries.
ABSTRACT
The Cryptocurrency and Bitcoin market has been experiencing increasing regulation across the globe in attempts to reduce its usage for criminal activities and ensure safety of its users. In particular, many countries have attempted to expand Anti-Money Laundering (AML) regulations made for more traditional financial institutions to apply to cryptocurrency exchanges. In this paper I explore whether enforcing AML regulations that require cryptocurrency exchanges to abide by Know-Your-Customer (KYC) laws are effective in stopping illegal activity in Bitcoin. Different countries have introduced these regulations at different points in time, allowing for a natural experiment that compares multiple countries across multiple periods. I use a staggered difference-in-difference approach in order to determine the impact on exchange volumes of introducing these policies. I also adapt the model to account for potential spillover effects between exchanges when a country is regulated. I find that a country that introduces these regulations experiences a decrease of around 19.8% in monthly Bitcoin volume in its exchanges. This is the case when volume is measured in either BTC or USD. However, spillover effects are also occurring between exchanges, suggesting that individuals are moving to unregulated exchanges instead of stopping their use of Bitcoin altogether. The findings in this paper are relevant for governments around the world who are considering regulating the usage of cryptocurrencies, particularly Bitcoin, and the impacts this will have.
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Sally Evans: The Relationship Between Outside Temperature and Court Sentencing in NSW.
ABSTRACT
The influence of temperature on cognition, mood and decisions is a widely researched topic. This thesis is the first investigation into the impact of temperature on the outcomes of criminal court proceedings. This thesis is motivated by Heyes and Saberian (2019), who analysed the relationship between temperature and immigration grants. Making use of New South Wales Bureau of Crime Statistics and Research (BOCSAR) data on court proceedings from 1994 up to July 2019 I use a set of linear regression models, where severity of punishment and sentencing outcome are analysed. The preferred specification includes weather controls as well as day of week, year and court-month fixed effects. Further analysis is conducted into the significance of region, year, type of crime and pollution controls in determining the existence of any relationship between temperature and court sentencing. The majority of the results show no statistical significance. However, the estimates are precisely derived, as they draw on over one million cases. Therefore, the results suggest that the New South Wales (NSW) justice system is not influenced by fluctuations in temperature; ultimately a positive result for the welfare of those in the justice system.
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Geoffrey Miller: Relative Performance Feedback and Willingness-To-Pay: Experimental Research on Consumer Spending.
ABSTRACT
In this paper, we conduct a between-subject lab experiment to investigate the effect of relative performance feedback on consumer spending. We allocate subjects into groups of four, ask them to complete a cognitive task and give subjects’ explicit feedback on their rank in their group in the treatment condition. We then elicit subjects’ willingness-to-pay for gourmet chocolates. Our results are indicative of a possible systematic effect in which subjects’ willingness-to-pay increases when they receive positive feedback and decreases when they receive negative feedback. We also discuss possible mechanisms through which this systematic effect may occur, such as self-esteem and self-control. This paper contributes to a growing literature on performance feedback and has potential applications in consumer protection policy.
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Ramya Prabhakaran: Impact of NGO interventions in improving economic outcomes for farmers in North and North-East Sri Lanka.
ABSTRACT
This thesis investigates the causal impact of a development program implemented by a small, Australian non-government organization. The program is offered to smallholder farmers in North and North-East of Sri Lanka, with the aim of increasing income for these farmers. Therefore, I examine income as the outcome variable. Employing quasi-experimental methodology, a staggered difference-in-difference model is created using linear and log-linear specifications. 435 farmers from 4 various villages are analysed. This is the first study to facilitate an empirical analysis of the NGO’s development program. Beyond investigating whether this program facilitates an improvement to farmer incomes, the study also provides recommendations to NGOs similar to the one investigated in this thesis on how to conduct prospective studies on their work.
2018
Amrit Parish: The Predictive Power of Consumer Sentiment Indices for Australian Consumption Growth.
ABSTRACT
There are many studies that examine the predictive power of consumer sentiment indices for consumption growth. Most studies find that the predictive power of consumer sentiment indices to be quite limited, after other determinants of consumption are accounted for. Nonetheless, it is possible that the predictive power of consumer sentiment indices is particularly large at specific times, such as economic turning points. Accordingly, this thesis examines the predictive power of an Australian consumer sentiment index around major turning points in Australian consumption growth. The predictive power is examined using the methodology proposed by Carroll, Fuhrer and Wilcox (1994). The results indicate that the consumer sentiment index does not contain unique information around major turning points, and thus there is no independent predictive power.
Despite their apparent lack of predictive power, consumer sentiment indices receive a great deal of media attention, and their movements are watched closely by market economists. In Australia, a consumer sentiment survey question receives an equal share of media attention, and the aggregate response to this question is considered quite seriously by market economists. This is because market economists consider the question to be an aggregate measure of consumer risk preference. In this thesis, the survey question is used to construct two new and alternative indices of consumer sentiment. Accordingly, the predictive power of these two indices for consumption growth is examined using the methodology proposed by Carroll, Fuhrer and Wilcox (1994). The results indicate that the two indices have more predictive power than the conventional consumer sentiment index.
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Liqing Chen: The Effect of Age-Related Active Labour Market Policies on the Labour Market Outcomes.
ABSTRACT
Various forms of active labour market policies have been implemented over the past decades to address population ageing. Age discrimination legislations (ADL) have been adopted progressively by European countries since 2000 while Hiring Subsidies were also placed, along with several pension reforms, to increase the labour market engagement of older people. I employ a staggered differences-in-differences approach to identify the separate effects of four policies in one unified framework by exploiting the variation in the timing of the treatments across six European countries over time. By using a retrospective panel dataset, I find that these policies are effective in boosting the labour force participation, but rather heterogeneously. In particular, ADL is most effective for males aged 50 to 58, while the Hiring Subsidy and the Early retirement significantly increase the labour force participation among females and only one group of males aged 59 to 67. Moreover, the empirical evidence suggests that these positive labour supply responses driven by the policies are also accompanied by harmful unintended effects. First, for ADL, the participation and the unemployment rate significantly decrease for older workers excluded from the law coverage, which crowds out the positive effects and leads to a smaller or even zero overall effect. Second, a significant increase in the unemployment rate among workers aged 50 to 58 as a result of the Hiring Subsidy. This suggests that both firms and workers may strategically benefit from the Hiring Subsidy, precipitating a higher turnover rate in employment.
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Lucas Walsh: Search Duration, Acceptance Deadline and Labour Market Conditions.
ABSTRACT
This paper builds a theoretical framework for analysing the effects of different strategic decisions within the hiring market. The strategic decisions accounted for within this paper include the time where the offer must be accepted or rejected, negotiable wages and the option of continuing search. It considers various factors that are outside the players control such as timing the candidate is found and labour market conditions. The model is a dynamic two player model, with a firm proposing an offer with various strategic decisions that can be utilised and a candidate responding. An objective of the paper is to see how the strategic decisions are altered by the various factors outside the control of the players. This paper builds a relationship between the two key underlying inputs and strategic decisions. Firstly, a relationship is established between timing of the offer and amount of time the candidate is given to respond. Also, a relationship is established between labour market conditions and the optimal time given to respond to an offer. Along with this there are two thresholds established for when sending the offer is better than continuing the search. The first threshold considers the minimum value of a candidate required to justify sending an offer. Another version is built displaying the maximum wages that can be justified to send to a given candidate.
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Nina McClure: Commodity Currencies and Fiscal Policy.
ABSTRACT
This thesis proposes three interrelated hypotheses. Hypothesis 1 proposes that there is a negative relationship between private absorption (private consumption plus private investment) and net exports for Australia at all times. This conjecture comes from the Mundell-Fleming IS/LM framework. Hypothesis 2 proposes that the negative relationship between private absorption and net exports will be stronger for Australia, in the event of a large external shock or global crisis such as the global financial crisis, as Australia has a commodity currency. Both Hypothesis 1 and Hypothesis 2 are tested separately by means of a vector autoregression model, using data for Australia’s components of GDP. Both hypotheses rely on an exchange rate mechanism, but I document the widely attested failure to model exchange rates, which necessitates the indirect test using GDP components. The results from the models give evidence in favour of both Hypothesis 1 and Hypothesis 2. Finally, based on these results, I form a third hypothesis that is discussed but not tested. Hypothesis 3 proposes that, as Australia has a commodity currency and a floating exchange rate, net exports may automatically substitute for countercyclical fiscal policy, as net exports will shield GDP during a global crisis.
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Pham Uyen Trang Ngo: Score Uncertainty under the Constrained Serial Dictatorship Mechanism.
ABSTRACT
This paper analyses the Nash equilibrium outcomes produced by the Serial Dictatorship mechanism with a constrained number of reported preferences and the uncertainty in exam scores. The analysis focuses on fairness and non-wastefulness in the Nash equilibrium outcomes and the conditions under which they occur. We consider a school choice model that uses cardinal preference and captures the score uncertainty. We analyse a specific interval of uncertainty and explore an uncertainty threshold relative to the number of limited preferences and schools’ capacity, above which an unfair matching is realised with a positive probability in any Nash equilibrium outcome. The number of students who have justified envy with a positive probability increases in the size of uncertainty in the studied interval. Wasteful matching has not been found in any Nash equilibrium outcomes in the studied interval of uncertainty.
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Rhiannon Davies: Specialisation in Same-Sex and Heterosexual Households.
ABSTRACT
I propose a Specialisation Index to investigate specialisation in same-sex and heterosexual households. Using HILDA survey data, same-sex couples are compared to different-sex couples to examine whether these couples exhibit a specialised division of labour and whether they divide their labour to benefit from productivity differences in paid employment. This is the first study to facilitate a direct measure of specialisation in same-sex households, combining information about paid work and domestic work from both couple members into a single index of specialisation. Overall, I find that same-sex couples are much less likely than their heterosexual counterparts to specialise. However, their division of labour becomes much more specialised and aligned with heterosexual couples when differences in the presence of children and couple age are accounted for. Furthermore, I find that same-sex couples can organise their time in a way that is consistent with productivity differences in market work; however, only if children are present in the household. Ultimately, these results suggest that children matter greatly for the division of labour in same-sex households.
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Raymond Kumar: The Impact of Payment Mediums on Labour Productivity.
ABSTRACT
In this thesis, we conducted a controlled experiment to determine whether payment mediums impact labour productivity. We had two treatment groups: (1) cash and (2) prepaid EFTPOS card. To measure productivity, we had participants complete a real effort task. We found that participants in the prepaid EFTPOS card treatment were more productive than the participants in the cash treatment. This is consistent with the idea that cash has an inherently stronger association with market norms and thus the social norms of reciprocity are crowded out to a greater extent in the cash condition. This is the first paper, to the best of our knowledge, in this field and it is evident from this study that there is strong potential for further research.
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Redmond Riddell: Forecasting Realized Volatility: HAR versus Realized GARCH.
ABSTRACT
This study provides an empirical comparison between two dominant models in volatility literature regarding their ability to forecast future volatility. We adopt a short memory variant and a variant approximating long memory from both families of models. We compare the Realized GARCH to the Autoregressive model, and the Realized HAR GARCH to the HAR model. We adopt open to close returns, as well as five quadratic and integrated realized measures of volatility as proxies for the state of the market, and adopt four loss functions to determine comparative forecast accuracy. We then use two variants of the DMtests to ascertain forecast superiority within a given confidence level. After conducting forecasts using 6 stock indices from around the world, we find evidence through the use of robust loss functions that the Realized GARCH provides superior forecasts compared to the Autoregressive model. We find that, whilst the HAR has more significant forecasts than the Realized HAR GARCH model, there are no significant difference between forecasts when utilizing robust loss functions.
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Tasnim Rahman: Personality and the Ageing Experience: A Case Study on Senior Citizens.
ABSTRACT
The current economic literature modelling economic-decision making often assume personality traits are exogenous and stable over time. We assess the validity of this assumption over both eight-year and four-year frame time frames in advanced ageing individuals using nationally representative panel data from Australia. Our study demonstrates statistically significant increases in externality (1.2SD) over long run changes but our big 5 personality variables demonstrate relative stability with none of the traits recording any substantial standard deviation change. We illustrate mostly heterogonous results when observing if common life events are associated with personality, however relationship-, income-, and health-related shocks recurrently affected several of our personality traits across both time frames. However, a small number of life events including marriage and victim of a property crime are associated with subsequent changes in personality. Overall, over medium run changes we find more association between locus of control and life events when compared to the big 5 personality traits. Additionally, worsening of mental health conditions were reported to decrease several of our personality traits, a substantial 0.39 SD decline in conscientiousness associated with decreasing levels of mental health was the most drastic change amongst our personality traits. Lastly, our findings investigating the relationship between non-cognitive and cognitive traits indicate an increase in openness and a decrease in agreeableness when associated with cognitive changes, the rest of our personality variables were not associated with cognitive decline.
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Angsana Anna Horpitakwong: Monetary policy and search-for-yield: A study of heterogenous investment behaviours using stock-flow-consistent model.
ABSTRACT
This paper examines the interaction of monetary policy and risk-taking behaviour, known as ‘search-for-yield’, to explain the boom-bust dynamics of the business cycle. The key contribution of this paper lies in the policy analysis, which highlights that the effect of monetary policy depends on the intensity of search-for-yield behaviour. Using the stock-flow consistent modelling approach, this paper introduces discrete choices for economic agents by allowing search-for-yield investors to evaluate the market returns and modify portfolio composition between safe and risky structure. The main findings reveal that search-for-yield behaviour is a contributing factor to the economic instability and that contractionary monetary policy can be used to minimise the volatility. While this policy tool is found to achieve a favourable outcome in bringing economic stability, it, however, creates an adverse effect on the economic growth. Moreover, this trade-off is most significant when an economy has a stronger search-for-yield incentive. This suggests that in setting the policy target, the monetary authorities must comprehend the nature of the economy and that if the low policy target is to be adhered with an objective of spurring economic growth, the monetary authorities must thereby accept the consequences of greater economic instability and that search-for-yield is an avoidable phenomenon
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Utkarsh Naishadh Somaiya: Re-evaluating Amartya Sen’s Critique of Egoism in Economics.
ABSTRACT
Neoclassical economics models individuals as rational agents who seek to maximise their utility given a stable set of preferences. Amartya Sen has been a longstanding critic of the neoclassical conception of behaviour, arguing that people are more sophisticated than the single-minded egoists assumed in neoclassical models. Sen’s fundamental critique of egoism in economics is that a plurality of motivations drives human behaviour in addition to self-interest. Sen (1977) argues for the need to accommodate commitment as a motivation for behaviour in economic models. Commitment-based actions are non-egoistic in nature and drive a wedge between an agent’s choices and their welfare, a link that is crucial for neoclassical models. Neglecting to accommodate commitment does not only diminish the explanatory and predictive power of utility theory but also compromises its scientific status. The most notable defence of the ‘standard’ approach to modelling behaviour has been by Hausman (2012), who argues that preferences in economics should include all considerations that influence choice, including commitment. It is shown that while Hausman’s proposed solution to accommodating Sen’s fundamental critique is plausible, it implies a violation the ‘standard’ model he claims to defend. Therefore, upon re-evaluating Sen’s critique of egoism in economics, this thesis affirms the importance of Sen’s fundamental critique and shows that attempts to incorporate non-egoistic motivations for behaviour require departing from the neoclassical models of utility maximisation.
2017
Rachel Power: A Policy Paradox? Evaluating a Target for Gender Diversity in Corporate Australia.
ABSTRACT
In 2015, a target was set to improve gender diversity in corporate Australia – that 30% of positions on the boards of directors of ASX 200 companies should be filled by women, by 2018. The 30% Club, the organisation responsible for the policy, is established in 11 nations, though no research exists which causally assesses the effect of the organisations’ targets on the representation of women in the corporate sphere. Using data from the Workplace Gender Equality Agency, this paper assesses the impact of the 30% target in Australia. We analyse changes in firms’ board-level gender balance, internal policies and processes, and the gender composition of each firms’ workforce, to evaluate the usefulness of the 30% Club target in the Australian context and to draw conclusions about the effectiveness of a soft-law approach.
We find limited empirical support for the hypothesis that the 30% Club intervention significantly increased the share of women on the boards of targeted companies, though results suggest that affected firms established formal policies for selecting directors and set targets to achieve board gender balance, in response to the policy. These results signal a policy paradox: firms have responded to the target by implementing gender diversity policy measures, rather than by improving the substantive representation of women in management. We conclude that to maintain this initial policy-based progress, industry regulators must work to hold firms accountable to their targets, to ensure that policy outcomes translate to a near-term improvement in the number of women in corporate leadership positions.
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Maximillian Baume: Why does retirement boost wellbeing? Heterogeneity in the effects of retirement on health and life satisfaction.
ABSTRACT
Modern economics literature tends to report that retirement has a positive impact on health and life satisfaction, but there is little insight into how different people will respond. Psychology theorists focus on this heterogeneity, but do not utilise causal inference techniques. I determine the causal impact of retirement for a very large sample of Australians completing the HILDA survey, on a variety of health and satisfaction outcomes. To do this, I use a fixed-effects instrumental-variable technique, including a powerful joint outcome test, using change in legislation surrounding the age pension for women as an instrument forretirement. I stratify the sample by personal characteristics and find that, in particular, external locus of control, intraversion and neuroticism are associated with a strong positive causal relationship between retirement and health outcomes. Intraverted individuals also show a positive causal relationship between retirement and life satisfaction. These results are in direct opposition to the psychology literature. I also present several mechanisms to attempt to explain these results, and provide suggestions for further research motivated by these findings
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Andrew Rook: Analysing the Impact of the Australian Carbon Tax on Electricity Sector Emissions: A Comparative Case Study.
ABSTRACT
Amidst renewed international efforts to combat the continued rise in greenhouse gas emissions, 196 Parties to the United Nations Framework Convention on Climate Change sealed the Paris Agreement. While the ultimate goal of the agreement is to curb continued rising emissions, it does not mandate what policy measures are to be taken. This paper attempts to estimate the impact of one such policy measure, a carbon tax. Surprisingly, there has been relatively little empirical analysis of the impact of carbon taxes. This quasi-experimental study focuses on the impact the Australian carbon tax had on emissions originating from its electricity sector. By utilising the synthetic control method, I find that the introduction of the carbon tax had the effect of reducing carbon dioxide equivalent emissions by -0.19 metric tonnes in a typical quarter, or a combined 35.22 million tonnes over the life of the tax. My findings are, however, quite sensitive when I test them against a number of placebo tests
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Kenneth Kiattichaidamrong: Exploring the Predictive Power of Consumer Sentiment.
ABSTRACT
The potential link between consumer sentiment and consumption has always been of interest to many economists. This thesis builds upon previous studies to establish whether or not there is any unique predictive relationship between measures of consumer confidence and consumption in Australia using an up-to-date data set. The results show no Granger causation from consumer sentiment to aggregate consumption in conditional tests, however there is evidence of reverse causality from consumption on durables to sentiment. Therefore a possible explanation is that consumer sentiment is a rationalization of consumption which only appears after spending occurs. There is also evidence which shows that consumer sentiment questions which ask about current conditions contain better information than others. Overall the conclusion is that consumer sentiment surveys are not useful in their current form and policymakers should be wary in using sentiment data to shape their decisions
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Jack Unicomb Laird: Here Comes the Boom. An evaluation of policy responses to an asset ‘bubble’ in a Post-Keynesian model.
ABSTRACT
This thesis adapts a Post-Keynesian model from Docherty (2014) adding an open economy dimension. The objective of this thesis is to examine the effectiveness of a number of policy responses, including macroprudential responses, to the emergence of an asset bubble in an open economy model that takes explicit account of international capital flows. This thesis aims to address the concerns APRA and the FSI (2014) have raised surrounding the possible loss of liquidity within Australia following a loss of foreign investor confidence. The results indicate that a monetary policy response is the most effective in mitigating the emergence of an asset bubble, and limiting its impact on the real economy in an open economy setting. This thesis finds evidence in support of a ‘leaning against the wind’ approach for monetary policy to mitigate the emergence on an asset bubble. Further, the results differ from previous literature which classified a monetary policy response as possible destabilising under the circumstances of large capital inflows. We find that during episodes of capital flight, monetary policy can indeed stabilise the economy.
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Sin Hung Yu: Adverse Selection in Australian Private Health Insurance Market.
ABSTRACT
Premium for private health insurance (PHI) in Australia has been rising in the past decades, and it has been reported in the media that younger people are dropping out of the private health insurance market. These may be indicative of the deterioration of the risk profile of the Australian PHI market. This thesis therefore examines whether adverse selection is a potential cause for the increasing premium in the Australian private health insurance market. Using a panel dataset, the Household, Income and Labour Dynamics in Australia (HILDA) survey, I test for whether the risk pool in the PHI market is deteriorating overtime as an indication of adverse selection. Results from my analysis provide no evidence of the presence of adverse selection in the Australian PHI market, but instead the risk pool in the PHI market has remained stable between 2004-2013. For those aged 30-64, the risk pool has improved, instead of deteriorated, during this period. Upon further investigation, the stabilisation of the risk pool is closely related to the increasing level of government subsidy in the PHI market during this period. The increase in PHI premium is unlikely to be the result of adverse selection, but a mere reflection of the increase in cost in healthcare provision in general. For policy makers, the results therefore raised the question on whether the current level of subsidy in the PHI market is sustainable in maintaining the risk profile of the market in the future.
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Michele Cappai: Unobservability of rejected applicants in probability of default models: “A counterfactual analysis with correction techniques for mortgage loans.
ABSTRACT
Credit scoring and probability of default models have been used for decades by lending institutions to assess an applicant's worthiness to receive credit, yet the construction of these predictive algorithms has been highly criticised in the literature. Several scholars have discussed how lending institutions’ credit scorecards and probability of default (PD) models are affected by rejection bias. Rejection bias arises when lenders use historical data, which contains accepted borrowers only, to assess new applicants. To amend the above-mentioned problem, developers conceived several techniques. Reject inference is a set of powerful techniques whose aim is to bring improvements to predictive models. In retail banking, reject inference can be applied to improve the assessment of applicants requesting finance and monitor the performance of existing customers. This paper’s objective is to explore the bias issue in mortgage finance, using a novel approach and a rich dataset. Finally, the bias will be corrected exploring two different techniques.