2007 Annual Report - Melbourne Institute by The Faculty of Business and Economics, The University of Melbourne

Melbourne Institute of Applied Economic and Social Research Annual Report 2007 and Outlook 2008

CONTENTS DIRECTOR’S REPORT

HIGHLIGHTS 2007

OUTLOOK FOR 2008

LABOUR ECONOMICS AND SOCIAL POLICY

THE HILDA SURVEY

APPLIED MACROECONOMICS

APPLIED MICROECONOMICS

CONTRIBUTIONS TO POLICY ANALYSIS AND KNOWLEDGE TRANSFER

WORKSHOPS

MELBOURNE INSTITUTE FORUMS

OUR SCHOOLS…OUR FUTURE CONFERENCE

ADVISORY BOARD, 2007

OUR STAFF, 2007

STAFF PUBLICATIONS, 2007

SEMINARS AND PRESENTATIONS, 2007

PUBLICATIONS BY SUBSCRIPTION

FINANCE AND PERFORMANCE INDICATORS

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Director’s Report

Professor Stephen Sedgwick

As even a cursory reading of this report will show, 2007 has been a very successful year for the Melbourne Institute. Feedback from our major clients has confirmed that our staff have delivered high quality contracted research on time and to budget. While all areas contributed, the work of the Labour Economics and Social Policy team is especially noteworthy in this respect. It has also been a very good year in terms of the traditional academic metrics. Income received from peer review granting bodies like the ARC and NH&MRC has been at record levels. High quality academic conferences and workshops were held covering a range of issues as diverse as overskilling, the outcomes of research based on HILDA datasets, and Asian financial integration. All areas maintained an impressive list of publications, presentations at conferences and the like. The details appear in the body of this report. An important part of the work of the Melbourne Institute is the contribution it makes to the development of good public policy. The most direct contributions occur through policy-relevant research, including contracted research that responds to the research priorities and interests of government departments. Other avenues include the approximately quarterly Economics Forums, which in 2007 addressed climate change, work–life balance, housing affordability and the economy. The Melbourne Institute also hosted, jointly with The Australian newspaper, a very successful one-day conference, Our Schools...Our Future, which featured the election debate on education between the government and opposition. The Applied Macroeconomics team continued to refine and publish its suite of sponsored indices reporting on aspects of the Australian economy. Importantly, however, the team advanced the refurbishment of the Melbourne Institute’s modelling capability, which will underpin the resumption of publication of short-term economic forecasts from early 2008. Finally, the end of 2007 also marked the end of the transitional phase for the Health Economics team that Professor Tony

Scott has built from scratch over the last two and a half years. Following a very successful recruitment drive and the receipt of a number of peer review grants, the team has now reached critical mass and will function as a free-standing research program from the beginning of 2008. The large body and high quality of work undertaken in 2007, as in earlier years, is only possible because of the flexibility, professionalism and hard work of our staff. I thank them most sincerely for their efforts. Let me also pay tribute to my predecessor as Director, Professor John Freebairn, for his inspiring leadership and great scholarship during his time here and whose very large shoes I can but hope to fill. I also thank the senior management team for the leadership of their teams and, speaking personally, for their encouragement and support. Special thanks are due to our Deputy Director, Professor Mark Wooden, who steered the ship so capably in the interregnum between John’s departure in April and my arrival in August. Finally, I thank the members of the Advisory Board for their guidance and suggestions, and especially our long-standing Chair, Tony Cole, whose wisdom and experience is invaluable. I look forward to working with the team here at the Melbourne Institute and with our Advisory Board, our clients and other stakeholders to build on success in 2008. We aim to continue to build our modelling and professional capabilities to undertake high quality applied research into important economic and social issues and contribute to public policy debates when we have the expertise. In addition, amongst other things, it will also be timely in 2008 to review the strategic directions of the Melbourne Institute to ensure that they best serve the needs of our community.

Professor Stephen Sedgwick Director

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Highlights 2007 • The Australian Government announced in May that it will provide funding to extend the collection of HILDA Survey data for a further four years. • The third HILDA Survey Research Conference was held in July, with around 250 registrants attending from eight different countries. • The sixth wave of the HILDA Survey was completed, with a wave-on-wave response rate of close to 95 per cent achieved. • In September 2007, the Applied Macroeconomics team presented a prototype time series model which featured time-varying parameters that captured the evolution of behaviour over time. The model was applied to study how much ‘good luck’ and ‘good management’ contributed to the recent ‘good performance’ of the Australian economy. • The MABEL (Medicine in Australia: Balancing Employment and Life) Survey of doctors started piloting survey instruments in 2007 in preparation for the first wave in May 2008. • A very successful conference, Our Schools...Our Future, was held in November in conjunction with The Australian. It also included the federal election debate on education between the then federal education minister and the then shadow education minister. • During 2007 members of the Labour Economics and Social Policy team hosted two highly successful workshops: the Australian Labour Market Research Workshop and the Education and Skill Mismatches in the Labour Market Workshop. Both were attended by leading academics in the fields.

• All members of the Labour Economics and Social Policy team were involved in the second Social Policy Research Services Workshop hosted by the Department of Employment and Workplace Relations. The papers presented provided an overview of the considerable body of new evidence generated by the Labour Economics and Social Policy team over the year. • In late 2007 the Labour Economics and Social Policy team was selected to participate in the Research and Evaluation Program of the National Centre for Vocational Education Research (NCVER) following a competitive tender process. The NCVER Research Program is designed to support the five national research priorities set by the Ministerial Council for Vocational and Technical Education. • Income received from contractual research amounted to $9.4m in 2007, an 18 per cent increase on 2006. • Staff were awarded two new ARC Discovery Grants and one new ARC Linkage Grant commencing in 2008. In 2007, funding received from such peer review bodies amounted to over $903,000, which was three times the level it was in 2004. • It was another very successful year for publications. Forty-five articles were published in refereed journals and there were numerous presentations at conferences and seminars. • The Industrial Economics team developed two new indexes. The IBM® – Melbourne Institute ‘Innovation Index of Australian Industry’ was launched in May and work began on the ASEAN Community Progress Monitoring System in June.

HILDA Survey Research Conference, July 2007

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Outlook for 2008 New Health Economics Research Program A new Health Economics research program will be established from 2008, making it the fifth research program within the Melbourne Institute. Health Economics was previously a component of the Applied Microeconomics program. The program will have five staff members in 2008, and will also include 19 other economists from across the University as members of the program. This includes colleagues from within the Melbourne Institute who are collaborating on health projects, and also from the Department of Economics, and the Faculty of Medicine, Dentistry and Health Sciences (Department of General Practice and Centre for Health Policy, Programs and Economics). The aim of the program is to provide a focus for health economics research within the Melbourne Institute and across the University and to become a centre of excellence for research into health economics.

HILDA 2008 will see the eighth wave of the Household, Income and Labour Dynamics in Australia (HILDA) Survey conducted. The special focus in this year will be on family formation and relationships. The HILDA Survey team will also be spending part of the year working on the bid to secure the next contract, expected to cover waves 9 to 12.

Indexes The Applied Macroeconomics team will continue to publish a range of sponsored indexes that throw light on current and expected economic conditions. In 2008 this work will also inform the Melbourne Institute’s economic forecasts which will resume publication on a monthly basis. In addition, the Industrial Economics team has entered into an agreement with Asialink to develop a multi-component index measuring the degree of Australia–Asia integration over the last 10 years. The research work is scheduled to begin in 2008 and will produce regular annual updates of the index for the next three years. The team will also update its IBM® – Melbourne Institute ‘Innovation Index of Australian Industry’.

Vocational Education and Training In addition to its well-established and significant program of contracted research in support of the Social Policy Research Services contract, the Labour Economics and Social Policy team will begin work on a new program of work related to vocational education and training. This contract, managed by the National Centre for Vocational Education Research, will further build Melbourne Institute’s profile in research into economic issues associated with education, training and skilling.

Strategic Plan Dr Sung-Hee Jeon and Professor Tony Scott

MABEL The first wave of the Medicine in Australia: Balancing Employment and Life (MABEL) Survey will go live in May 2008. This is a major national longitudinal survey of doctors that will provide valuable information in helping to address medical workforce shortages. We are collaborating closely with Monash University and have established a website at <www.mabel.org.au>. MABEL has a Policy Reference Group to help ensure the survey and analyses are policy relevant.

The Melbourne Institute will review and update its current strategic plan (2005–2009) and reconsider its operations and direction during 2008.

Economic and Social Outlook Conference The fifth Economic and Social Outlook Conference, New Agenda for Prosperity, will be hosted jointly by the Melbourne Institute and The Australian in March 2008. As usual, the conference will address a wide range of economic and social policy issues including the policy challenges posed by continuing fast rates of economic growth, the demands of an education revolution, how best to combat indigenous disadvantage, the implications of climate change and many others.

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Labour Economics and Social Policy Financially and in terms of staff numbers, LESP continued to grow, ending 2007 about 30 per cent larger than it started and, given its considerable present size and expected further growth in 2008, with a revamped management structure, helped by our new administrator, Paula Madsen.

Professor Kostas Mavromaras

2007 has been a highly productive year for the Labour Economics and Social Policy (LESP) research program. The Social Policy Research Services (SPRS) contract1 entered its seventh year and continued adding to the considerable body of research on the Australian labour market. The emphasis of the research continued to be on the dynamics of the labour market, where the LESP team is arguably a leading force in the development of Australian research and resulting evidencebased policy. The highly successful SPRS Workshop in Canberra highlighted the quality, continuity and cohesiveness of the research resulting from the SPRS contract. The LESP team has now built a substantial volume of ARC work that enhances the diversity of its research and the breadth of its national and international collaborations. The ongoing ARC projects made good progress producing a number of working papers and published articles. Two new ARC projects commenced, one looking at disadvantaged job seekers and the other at retirement issues. The academic output of the LESP team is continually improving. Considering the substantial amount of contract work carried out by the LESP team, the outcomes are very good. Members of LESP presented 27 papers at national and nine papers at international conferences in 2007, a reflection of the very strong capacity building and academic performance ethic of the Melbourne Institute and the hard work of the researchers. In 2007, 23 new working papers were produced, and 18 new journal articles and one book were published. 2007 also saw the intensification of work related to the Melbourne Institute Tax and Transfer Simulator (MITTS) model, especially on the development front.

Undoubtedly the most exciting development concerning future research possibilities has been the successful expansion towards a broader human capital agenda. Although the issues of skills, education and more general human capital have been underlying the Melbourne Instituteâ&#x20AC;&#x2122;s research for a long time, from the end of 2006 new emphasis was put on the research areas of skills shortages, skills mismatches and related labour market issues. The success of the Skills Mismatches Workshop in May 2007, the new collaboration with Swansea University on higher education and the new research partnership with the NCVER on vocational education all point towards the human capital research agenda as one of the promising areas of expansion for the Melbourne Institute.

Social Policy Research Services Contract 2007 was the seventh year of the research partnership with the Commonwealth. Eight new projects were started in 2007 and six projects were completed. The second successful SPRS Annual Conference held in Canberra in September provided an overview of the considerable new body of evidence generated by LESP since the last conference for the SPRS contract. The conference concluded with a very informative panel discussion by Professor Richard Blundell and the academic members of the Advisory Group and was chaired by the then Secretary of DEWR, Dr Peter Boxall. Regular meetings of the Research Management Committee were held throughout the year in both Canberra and Melbourne. The final meeting for 2007 to endorse the 2008 Research Agenda was postponed due to the federal election. Three projects for 2008 have been approved and a further three or four projects that reflect the policy focus of the new government are being developed and will be endorsed early in 2008.

1 Until December 2007, the contract was managed by the Department of Employment and Workplace Relations (DEWR). With the new administrative arrangements following the election, the management of the SPRS contract passed to the new Department of Education, Employment and Workplace Relations (DEEWR).

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The table below lists the status of projects that were started or in progress during 2007.

SPRS Projects in 2007 SPRS projects carried over from 2006 and completed in 2007

to this important research program in the areas of increasing the labour supply and motivating individuals to participate in vocational education and training. It is anticipated that research will commence in early 2008 and regular updates will be available from both the Melbourne Institute and the NCVER. The research on vocational education and training is an essential element in understanding the development of human capital in Australia and a vital constituent of the research contribution of the Melbourne Institute to the relevant Australian debate and policy.

1/06

Use of informal childcare and decisions on work by income support recipients

2/06

Stepping stones – do low paid jobs lead to increased earnings and lower welfare dependency over time (‘low pay dynamic’)?

3/06

Possible cost shifting from workers compensation to income support for people with work-related disabilities

Smaller Projects and Consultancies

6/06

Skill shortages and the absence of wage pressures

Modelling the Costs and Labour Supply Effects of Changes to Childcare Payments

SPRS projects carried over from 2006 not yet completed 5/06

Location economics of income support recipients

7/06

Working credits – a low cost alternative to universal income tax credits?

The MITTS team undertook a series of consultancies in 2007 in relation to government payments for childcare. These calculations provided background material to help inform federal Labor’s Affordable Child Care Plan that was part of their election platform.

8/06

Link between changes in employment and changes in income support

MITTS Model: Training and Technical Assistance

SPRS projects started and completed in 2007 5/07

What determines how long women spend out of the labour force after the birth of a child

7/07

Teenage parents – income support, education and paid work

SPRS projects started in 2007 and continuing in 2008 1/07

Incidence of work-related injury and illness and outcomes for specific groups of workers

2/07

Intergenerational correlation of labour market outcomes

3/07

The factors that influence wage progression

6/07

Full-time work and sole parents

8/07

Skills acquisition, employability and employment choices of income support recipients

9/07

Pathways to higher pay

NCVER In late 2007 the LESP team was selected to participate in the Research and Evaluation Program of the National Centre for Vocational Education Research (NCVER) following a competitive tender process. The NCVER Research Program is designed to support the five national research priorities set by the Ministerial Council for Vocational and Technical Education, and will assist government and industry in meeting the challenges faced by the national training system in fulfilling Australia’s future skill needs. The LESP team will draw on its expertise in modelling labour market dynamics to contribute

As part of an ongoing consultancy with the Commonwealth Treasury, the Melbourne Institute provided training and assistance with the Melbourne Institute’s microsimulation model in 2007. A small project to update MITTS’s underlying wage and labour supply models was also undertaken.

Poverty Lines Quarterly, regional-level Poverty Lines were issued in 2007 according to the agreement with Westpac.

Federal Government Funding of Non-Government Schools This ongoing study is being undertaken for the Yeshivah Centre.

International Reform Monitor Since 1999, the Melbourne Institute has been a partner organisation of the International Reform Monitor project, a network of representative organisations from 15 OECD countries. Initiated and coordinated by the Bertelsmann Foundation (Germany), the network monitors and produces publications on developments in labour market policy, industrial relations and social policy in member countries.

External and Internal Collaborations Internal Collaborations Several internal collaborative projects were either initiated or built upon in 2007, including the joint work between the LESP and the Applied Macroeconomics teams on the ambitious undertaking to link MITTS to the Melbourne Institute Dynamic

6 MELBOURNE INSTITUTE OF APPLIED ECONOMIC AND SOCIAL RESEARCH Annual Report 2007 and Outlook 2008

Some members of the Labour Economics and Social Policy team

Stochastic General Equilibrium (MIDGE) model. Other intraInstitute collaboration between the LESP team and the newly established Health Economics team saw the development of the MABEL Survey and related research on the labour market for nurses.

Collaboration with the Brotherhood of St Laurence Collaborative work with the Brotherhood of St Laurence continued under the leadership of Dr Rosanna Scutella, the Ronald Henderson Research Fellow. The joint ARC Linkage project on Disadvantaged Job Seekers (R. Scutella, R. Wilkins and K. Mavromaras) has been the first serious successful outcome from this collaboration. Crucially, the new ARC project involves distinguished researchers from overseas (Professor Paul Gregg, University of Bristol and Dr Jonathon Wadsworth, London School of Economics) informing Australian research and policy of the international experience in related areas. Professor Kostas Mavromaras also took up a position on the Brotherhood’s Round Table of Research Advice during 2007.

International Collaborations Collaborative work with researchers outside Australia included the continuing joint work of members of the LESP team with researchers at the University of Aberdeen on the Evaluation of Obesity Prevention and the continuing collaboration between LESP and Dr Justin van de Ven (National Institute of Economics and Social Research, UK) on the dynamics of MITTS. In March 2007 a major new collaborative project commenced with Professor Peter Sloane and Dr Nigel O’Leary (both from the Department of Economics and WELMERC, Swansea University). This project investigates the incidence and effects of skill mismatches in the Australian and UK labour markets and is jointly funded by the UK ESRC and the Melbourne Institute.

ARC Projects With the further success of funding applications in 2007, the LESP team has reached a substantial level of involvement in ARC projects, as the range of topics covered and the number of projects below demonstrate.

ARC Discovery Grants • Professor Kostas Mavromaras (with Professors Mark Wooden, Melbourne Institute and Jeff Borland, Department of Economics), ‘Labour Market Transitions and Dynamics in Australia’. • Dr Yi-Ping Tseng (with Associate Professor Garry Barrett, School of Economics, University of New South Wales and Professor Tom Crossley, Department of Economics, McMaster University), ‘Understanding the Saving Behaviour of Australian Households: Private Retirement Provision and the Policy of Forced Saving’. • Associate Professor Guyonne Kalb (with Professor John Creedy, Department of Economics), ‘The Effects of the Tax and Social Security System on Labour Supply and Social Welfare’.

ARC Linkage Grants • Associate Professor Guyonne Kalb and Professor Tony Scott (with Professor John Creedy and Associate Professor Michael Shields, Department of Economics), ‘Economic Modelling of the Nurses’ Labour Market in Australia’. • Dr Yi-Ping Tseng (with Dr Roger Wilkins, Melbourne Institute and Professor Jeff Borland, Department of Economics), ‘Experimental Evaluation of YP4: Is ‘Joining Up’ Services for Homeless and Jobless People a Net Benefit to Society?’ • Dr Rosanna Scutella and Professor Kostas Mavromaras (with Dr Roger Wilkins, Melbourne Institute), ‘Job Retention and Advancement of Disadvantaged JobSeekers’. • Professor Mark Wooden (with Professor Hal Kendig, University of Sydney; Dr Yvonne Wells, La Trobe University; Dr Kathleen O’Loughlin, University of Sydney; Professor David De Vaus, La Trobe University), ‘Ageing Baby Boomers in Australia: Informing Actions for Better Retirement’. • Delivery of Release 5 of the HILDA Survey dataset to almost 370 individual users.

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The HILDA Survey examined include: the impact of household debt on labour force participation; transitions out of casual employment; the distribution of domestic labour within households; and social disadvantage and teenage motherhood.

Data Collection and Questionnaire Design Professor Mark Wooden

Four More Years! 2007 was a watershed year for the HILDA Survey, with the Australian Government announcing in May that it will provide funding to extend the collection of HILDA Survey data for a further four years. This effectively guarantees the ongoing administration of the survey until the end of 2012, meaning data users (and other interested parties) can plan on a panel that will be at least 12 years long. There can be little doubt now that the HILDA Survey is well established and has made the transformation into a truly longitudinal data collection of international standing.

International Linkages Any doubt that the HILDA Survey was not world class should have been dispelled with the inclusion of the HILDA Survey as the fifth member of the Cross-National Equivalent File (CNEF). While announced in 2006, it was only in 2007 that the HILDA Survey data were included for the first time in the official CNEF data release. Administered at Cornell University in the United States, the Director of the CNEF, Professor Richard Burkhauser, attended the HILDA Survey Research Conference in July both to launch the inclusion of HILDA in the CNEF and to present a paper illustrating the uses of the CNEF data. The HILDA Survey was also represented for the first time at the CNEF Users Workshop, held at Cornell University in September. Finally, the growing reputation of the HILDA Survey resulted in an invitation to speak in Seoul in October at an international conference on the comparative use of panel data.

Third Research Conference The rising international profile of the HILDA Survey was further reinforced at our third biennial HILDA Survey Research Conference in July. Australia-based registrants were joined by colleagues from Chile, France, Germany, Korea, Netherlands, New Zealand and the United States. In total, around 250 persons registered for the conference and heard from 35 different speakers. The range of topics discussed reflected the breadth of the HILDA Survey content. Examples of the issues

Wave 6 The main business of the HILDA Survey is the collection and dissemination of data. In 2007, data collection was finalised for wave 6. Rates of respondent participation remain high, with our headline rate – the proportion of respondents from wave 5 who participate in wave 6 – almost reaching 95 per cent. After the usual array of checks and edits and extensive valueadding enhancements – construction of derived variables, weights, and imputation of missing values – the unit record data from this wave were released in January 2008.

HILDA Survey Response Rates Remain High 100 95

Previous wave respondent

Child turning 15

New entrant

% 80 75 70 65 60

W4 Wave

Wave 7 In addition to the preparation of data release 6.0, the other major activity during 2007 was the testing of the wave 7 survey instruments and the commencement of the wave 7 fieldwork (from late August). Preliminary indications are that response rates will be similar to the previous year. Key features of wave 7 include the re-introduction of the retirement module, previously included in wave 3, and the introduction of new question sequences on literacy and numeracy, diet, and smoking history.

CAPI Testing In conjunction with the wave 7 dress rehearsal, we also tested the administration of HILDA via laptop computers. Undertaken with approximately half the dress rehearsal sample, the results of our testing suggest that computer-assisted personal interviewing (CAPI) is generally well received by interviewers

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and respondents alike. Nevertheless, there are many teething problems to be sorted out before it can be implemented in the main survey. Most importantly, CAPI was associated with considerably longer interview times with obvious implications for either cost or the amount of data that can be collected.

of the issues were previously examined in volume 1 and are likely to remain a permanent feature of this report series (e.g., changing marital status, income mobility and labour mobility). The coverage of the HILDA Survey, however, is very broad, enabling examination of a wide range of different issues every year. Examples include: the aspirations of young people; working from home; changes in smoking behaviour; and private health insurance coverage.

Wave 8 Development work also commenced during 2007 on the wave 8 questionnaires, with skirmish testing of new content conducted in November. Innovative features for the testing phases of wave 8 include: • repeat of the extension module on fertility, family formation, non-co-residential relationships, and plans for the future previously included in wave 5; • new question sequences on non-co-resident family members, with particular emphasis on adult children, siblings and parents; • new questions on both job discrimination and sexual harassment; • an extension to the current question sequence on child support payments; and • further testing of questions on methods of pay determination.

Families, Incomes and Jobs: Volume 2 The HILDA Survey team released its second statistical report. This report presents short articles analysing a range of issues informed by the first four waves of the HILDA Survey. Some

Volume 3, which will cover the first five waves of data, was also drafted during 2007 and will be released in 2008.

Use of the HILDA Survey Data Continues to Grow Total data orders

Orders by new users

Cumulative number of users

Release 1 (Wave 1)

204

Release 2 (Waves 1 and 2)

265

167

371

Release 3 (Waves 1 to 3)

280

154

525

Release 4 (Waves 1 to 4)

329

171

696

Release 5 (Waves 1 to 5)

369

165

861

Release

Some members of the HILDA team www.melbourneinstitute.com 9

Applied Macroeconomics responses at different time horizons. In terms of GDP loss the least costly means of achieving a particular long-run inflation outcome is via the current monetary policy arrangements. Currency market alternatives are volatile but less expensive than the equity market in terms of output loss for short-term inflation horizons. (E. Claus with M. Dungey)

Central Bank Learning and Currency Risk: Should Only Inflation Matter for Monetary Policy? Professor Guay Lim

The Applied Macroeconomics team is responsible for the preparation of the following sponsored publications: • Westpac – Melbourne Institute Indexes of Economic Activity • Westpac – Melbourne Institute Survey of Consumer Sentiment • Westpac – Melbourne Institute Survey of Consumer Sentiment: NSW, Victoria, Queensland, Western Australia, South Australia • TD Securities – Melbourne Institute Monthly Inflation Gauge • Melbourne Institute Wages Report • Melbourne Institute Survey of Consumer Inflationary Expectations • Manpower – Melbourne Institute Employment Report • Melbourne Institute Household Saving and Investment Report Work was also undertaken during the year to refine and update the group’s forecasting methodology. Publication of forecasts will resume in 2008.

Research in 2007 Inflation Targeting, Learning and Q Volatility in Small Open Economies This paper examines the welfare implications of managing asset-price with consumer-price inflation targeting by monetary authorities who have to learn the laws of motion for both inflation rates. The central bank can reduce the volatility of consumption as well as improve welfare more effectively if it adopts state-contingent Taylor rules aimed at inflation and Q-growth targets in this learning environment. However, under perfect model certainty, pure inflation targeting dominates combined consumer and asset-price inflation targeting. (G. Lim with P. McNelis)

Monetary Policy in Illiquid Markets: Options for a Small Open Economy Two impediments to effective monetary policy operation include illiquidity in bond markets and the zero bound of interest rates. Under these conditions alternative means of enacting monetary policy may be required. This paper empirically explores policy options implemented through equity and currency markets that will generate similar inflation

This paper examines the role of interest rate policy in a small open economy subject to terms of trade shocks and timevarying currency risks. The private sector makes optimal decisions in an intertemporal non-linear setting with rational, forward-looking expectations. In contrast, the monetary authority chooses an optimal interest rate reaction function, given a loss function that is conditional on the state of the economy and given its ‘least-squares learning’ about the evolution of inflation and exchange rate depreciation. The simulation results of the effects of different policy scenarios on welfare show that, on balance, the preferred stance should be strict inflation targeting. (G. Lim with P. McNelis)

Inside the Black Box: How Important Is the Credit Channel? This paper develops a dynamic general equilibrium model to assess the importance of the credit channel relative to the interest and exchange rate channels. It is motivated by increasing theoretical and empirical evidence that credit market conditions affect the propagation of cyclical fluctuations in the economy. The relative contribution of each channel is determined by comparing the impulse responses when the relevant channel is suppressed with the impulse responses when all three channels are operating. The analysis shows that all three channels affect business cycle dynamics. The credit channel has an important influence on the central bank’s response to shocks, while the exchange rate channel magnifies output fluctuations. But the interest rate channel has the largest effects in the transmission of shocks to the economy. (E. Claus with I. Claus)

What Drives Worker Flows? This paper applies a multi-state latent factor intensity model to worker flows to obtain insights about the determinants of entry and exit rates pertaining to various labour market states. The analysis shows that one activity factor underpins the decision to move from employment and from unemployment and this result may be of special interest to policy makers concerned with understanding the rate of departures from the pool of both the employed and (especially) the unemployed. The paper also shows how to estimate a non-linear state space model using a Gibbs sampler that encompasses a Metropolis-Hastings algorithm as well as the auxiliary particle filter to estimate the latent process. The advantage of the approach is that it provides a parsimonious and efficient way to obtain key information about behaviour in labour markets. (M. Chua and G. Lim with R. Dixon)

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Co-movement and Integration among Developed Equity Markets In contrast to the focus on intertemporal global integration, this paper examines equity market integration from the dual perspectives of the global–regional dichotomy and the equity market regime structure. According to the findings, market volatility during periods of low global and European volatility tends to be dominated by idiosyncratic shocks, while common factors generally dominate given medium-level common volatility. There are significant differences among European markets regarding the relative importance of European-specific information, with little evidence of an increasingly important European factor. The importance of the global factor appears to have risen over time for most developed markets. (S. Tsiaplias)

Permanent Structural Change in US Short-Term and Long-Term Interest Rates Some members of the Applied Macroeconomics team

Asian Crises: Theory, Evidence, Warning Signals In July 1997, the economies of East Asia became embroiled in one of the worst financial crises of the postwar period. Yet, prior to the crises, these economies were seen as models of economic growth, experiencing sustained growth rates that exceeded those earlier thought unattainable. Why did the market not anticipate the crises? To this end, the authors review the Asian financial crises from two related perspectives: whether the crises were precipitated by a failure of the real exchange rate to be aligned with its fundamental determinants and/or whether the crises were precipitated by a divergence of the foreign debt from its optimal path. The first perspective is based on a coherent theory of the equilibrium real exchange rate – the NATREX model – which shows how ‘misalignments’ lead to currency crises. The second perspective is based on a model of optimal foreign debt ratio – derived from stochastic optimal control – which shows why ‘divergences’ lead to debt crises. The important point here is that these models suggest important variables which may serve as warning signals to predict crises. (G. Lim with J. Stein)

Markov-Switching Mean Reversion in Short-Term Interest Rates: Evidence from East Asian Economies This paper employs a Markov-switching approach to model the dynamics of East Asian short rates. Regime changes are incorporated in standard unit root tests to reveal periodic changes in the stationarity property of interest rates. There is evidence that three of the five short rates follow a random walk process in tranquil and low rates episodes but meanrevert in periods when rates are high and volatile. Singapore short rates are characterised by a random walk process, whereas the Philippines rates behave as a mean-reverting process in both regimes. Factors such as exchange rates, monetary policy and interest rate differentials vis-à-vis US interest rates influence the likelihood of short rates being in a volatile state. The regime-switching dynamics of interest rates carry important implications for policy makers. (M. Chua with S. Suardi)

This paper uses a time-varying error correction model to examine structural changes in the rate of adjustment to the long-run equilibrium and the cointegrating vector of US shortand long-term interest rates. The authors show that agents’ expectations of interest rate movements vary according to policy changes as reflected by changes in the direction of movements of the underlying parameters. (M. Chua with C.N. Low)

The Macroeconomic Content of Equity Market Factors Although existing research has examined the association between macroeconomic data and equity markets, little is known regarding the economic content of the latent factors common to national equity markets. Several models are estimated to examine the economic composition of the international common factors and provide an alternative perspective on the economic fundamentals underlying equity markets. A Bayesian selection process suggests that a common structure incorporating global and European factors is preferred to the baseline case of a single global factor or the extended scenario of dual global factors. The global factor is predominantly associated with industrial country trade and consumer prices. (S. Tsiaplias)

A Metropolis-in-Gibbs Sampler for Estimating Equity Market Factor An exact MCMC-based solution for the Kalman filter with Markov switching and GARCH components is proposed. To motivate the solution, an international equity market model incorporating common Markovian regimes and GARCH residuals in a persistent factor environment is considered. Given the intractable and approximate nature of the model’s likelihood function, a Metropolis-in-Gibbs sampler with Bayesian features is constructed for estimation purposes. To accelerate the drawing procedure, approximations to the conditional density of the common component are also considered. The model is applied to equity data for 18 developed markets to derive global, European and countryspecific equity market factors. (S. Tsiaplias) www.melbourneinstitute.com 11

Applied Microeconomics Ranking of Universities

Associate Professor Elizabeth Webster

Major areas of research in 2007 included the economics of health, innovation and intellectual property, and education. The Industrial Economics team, while continuing its work on the intellectual property system and enterprise performance, has also initiated a new project in developing a community progress monitoring system for the Association of Southeast Asian Nations or ASEAN.

Health Economics 2007 was a year of consolidation with the start of three new major research projects. The ‘MABEL’ longitudinal survey of doctors (NH&MRC), ‘Economic Modelling of the Nurses’ Labour Market in Australia’ (ARC Linkage Grant with Department of Human Services), and ‘Blended Payment Systems for GPs: Evaluation of a Natural Experiment’ (ARC Professor Tony Scott Discovery Grant). It has therefore been a busy year setting up these projects. For example, work on MABEL has included developing survey instruments, piloting and establishing a website. We have also recruited two new research fellows from Europe who have recently completed their PhDs in Economics: Stefanie Schurer (RWI Essen), who started in November 2007, and Peter Sivey (University of York), who will start in February 2008. Research on the economics of obesity is continuing in collaboration with colleagues at the University of Aberdeen, and an ARC Linkage Grant with the Department of Human Services on hospital quality and efficiency is coming to an end. Grant applications to the European Union and ARC were also submitted in 2007. We were also fortunate to host a number of visitors, including a long-term visitor, Tom van Ourti from Erasmus University, who will be returning in early 2008. Dr Jongsay Yong, Dr Alfons Palangkaraya and Professor John Freebairn (Department of Economics) were successful with an ARC Discovery Grant to investigate the effects of private health insurance on health care usage and health outcomes. The grant is worth a total of $108,000 over three years.

Further refinements were made to the methodology employed in previous years to develop a ranking scheme for Australian universities. Rankings of universities that are based on aggregate measures ignore the discipline coverage within institutions. In a paper by Ross Williams, for each of Australia’s 37 public universities, performance in research and teaching in seven broad discipline groups is evaluated and then aggregated up to obtain whole-of-institution rankings. Relative staff numbers are used as weights to aggregate research performance; student numbers are used to weight teaching performance. The rankings of the Australian National University and some technologically oriented universities are raised when scope is allowed for, but elsewhere the changes are minor. The paper will appear in a special issue of Higher Education in Europe.

Industrial Economics IBM ® – Melbourne Institute ‘Innovation Index of Australian Industry’ The inaugural study on the Innovation Index of Australian Industry uses key economic data dating back to the 1990s to provide a measurable rating of Australia’s innovation activity by industry. The research, funded by IBM Australia, aims to produce a regular annual report on the innovativeness of Australian industries. The index fills a gap in current innovation research: it is the first study to reflect the complex nature of innovation via an inter-industry, multi-indicator analysis approach. Although innovation is widely accepted as a key driver of economic growth and productivity, there has not been a published study in Australia to date that measures the many different aspects in which local industry innovates in its provision of products and services. The index represents the first attempt in Australia to measure industry innovation with the analysis of six key data groups: research and development intensity, patent intensity, trade mark intensity, design intensity, organisational/managerial transformation, and productivity.

ASEAN Community Progress Monitoring System This project aims to set up a statistical system to monitor progress of the 10 ASEAN nations towards economic, socio-cultural and political integration as ratified by the current ASEAN summits. An interim brief report, entitled ASEAN Brief 2007, was produced in November and circulated during the ASEAN Summit

12 MELBOURNE INSTITUTE OF APPLIED ECONOMIC AND SOCIAL RESEARCH Annual Report 2007 and Outlook 2008

in Singapore. A full report will be completed by the first half of 2008. The project was commissioned by the Australian Government’s overseas aid agency, AusAID, under the ASEANAustralia Development Cooperation Program. The monitoring system comprises a set of comprehensive statistical indicators covering the economic, socio-cultural and political-security development of ASEAN as a community. The system, once in place, will be maintained and updated by the ASEAN Secretariat in Jakarta.

• Three papers on the productivity performance of Australian firms were completed.

– The paper ‘Trade Liberalisation, Exit, and Output and Employment Adjustments of Australian Manufacturing Establishments’ examined the effects of trade liberalisation on firm performance and found that trade liberalisation tended to reduce employment, but the effect on firm exits was weak and no output effect was found. (A. Palangkaraya and J. Yong)

Other Projects and Research Activities Undertaken in 2007

– Another paper, ‘Geographical Agglomeration in Australian Manufacturing’, found some evidence that industry agglomeration was inversely affected by trade liberalisation. (A. Leahy, A. Palangkaraya and J. Yong)

– Lastly, ‘Exporter and Non-Exporter Productivity Differentials: Evidence from Australian Manufacturing Establishments’ found firms that export tend to have higher productivity, suggesting a learning-by-exporting effect. (A. Palangkaraya and J. Yong)

• A report was produced on ‘Inter-generational Justice, Discount Rates and Climate Change’ for the Garnaut Climate Change Review. This was commissioned by the Victorian Department of Premier and Cabinet. A critical inter-disciplinary review of the Stern Review on Climate Change and its implications for Australia was also undertaken. This was commissioned by the Victorian Department of Sustainability and the Environment. (P. Jensen and E. Webster) • As part of an ARC Linkage project (with IP Australia as the partner), a survey was conducted of Australian inventors who applied for patents with IP Australia. More than 4000 completed responses are expected once the survey is concluded in early 2008. The data will help to reveal the sources of uncertainty that characterise the innovation process, and will allow in-depth analyses of the characteristics that distinguish commercially successful innovations, and the firms that own them, from the unsuccessful ones. (P. Jensen, A. Leahy, A. Palangkaraya, E. Webster and J. Yong)

• A report based on a survey of Australian businesses doing business with China was completed. The research was a multidisciplinary effort involving staff from the Industrial Economics team and colleagues from the Law School and Department of Economics at the University of Melbourne. The working paper ‘In the Shadow of the China–Australia FTA Negotiations: What Australian Business Thinks about IP’ found that intellectual property issues (registration, examination and enforcement) were not the single most important concern of Australian businesses doing business with China. Other issues such as Chinese regulation and legal transparency were of greater importance. The paper will appear in Economic Papers. (A. Leahy, D. MacLaren, D. Morgan, K. Weatherall, E. Webster and J. Yong) • Following a survey of public-sector research scientists in Australia to examine the effects of patenting on the research culture, a report entitled ‘Intellectual Property, Freedom to Operate and Scientific Progress’ was produced. (P. Jensen, E. Webster and A. Leahy)

Some members of the Applied Microeconomics team

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Contributions to Policy Analysis and Knowledge Transfer • Organisation of the third HILDA Survey Research Conference. • Release of the second statistical report, Families, Incomes and Jobs, reporting findings from the HILDA Survey. • Hosted the annual Australian Labour Market Research Workshop on 8–9 February, which was organised as part of the Annual Meeting of the Australian Society of Labour Economists (details on page 15). • The Our Schools...Our Future Conference was held in November. This included the election debate between the then federal minister for education and the then federal shadow minister (details on page 17). • Organisation of our quarterly Economics Forums in Melbourne and Canberra (details on page 16). • Provision of key economic indicators, including Westpac – Melbourne Institute Indexes of Economic Activity; Westpac – Melbourne Institute Survey of Consumer Sentiment; Melbourne Institute Survey of Consumer Inflationary Expectations; Melbourne Institute Wages Report; TD Securities – Melbourne Institute Monthly Inflation Gauge; and Manpower – Melbourne Institute Employment Report.

• Publication of the Australian Economic Review, Australia’s leading academic journal specialising in policy-relevant applied economic research (details on page 29). • Release of the IBM® – Melbourne Institute ‘Innovation Index of Australian Industry’. This publication will report annually on the innovativeness of Australian industries. • Organisation of the Education and Skills Mismatches in the Labour Market Workshop on 3 May 2007. A policy distillation of the contents of the workshop appeared as a Policy Forum in the Australian Economic Review of September 2007 (details on page 15). • Organisation of a workshop on Capital Flows and Financial Integration in Asia: Implications, Prospects and Research Issues on 19 October (details on page 15). • Research program findings presented at the Labour Market Dynamics Social Policy Research Workshop, Changing Nature of Work and Welfare, held in Canberra on 20–21 September. • Joint organisation of the FEE-HELP Workshop held in Canberra on 11 December 2007 (details on page 15).

• Publication of 35 papers by Melbourne Institute staff on a range of topics in our Working Paper Series.

14 MELBOURNE INSTITUTE OF APPLIED ECONOMIC AND SOCIAL RESEARCH Annual Report 2007 and Outlook 2008

Workshops Capital Flows and Financial Integration in Asia Workshop On 19 October, a one-day workshop, hosted jointly by the Melbourne Institute and the Department of Economics, was held on the topic ‘Capital Flows and Financial Integration in Asia: Implications, Prospects and Research Issues’. Professor Shinji Takagi (Asian Development Bank Institute) provided a perspective on the issues facing the region while Dr Tim Robinson (Reserve Bank of Australia) presented an overview of global imbalances. The concerns of the Australian banking system were well canvassed by Mr Saul Eslake (ANZ Banking Group), Dr Rod Maddock (Commonwealth Bank of Australia) and Mr Huw McKay (Westpac Banking Group). A lively roundtable discussion of key research questions completed the day with valuable contributions from the invited academics, policy analysts and business economists.

2007 Australian Labour Market Research Workshop The Australian Labour Market Research Workshop is designed to disseminate high quality research on labour economics and labour relations and to promote informed public debate about current labour market issues. DEWR is the main sponsor of this annual event. Additional sponsors this year were the Victorian Department of Treasury and Finance, the Australian Bureau of Statistics, the Productivity Commission, the Australian National University (through the College of Business and Economics, and the Economics Program of the Research School of Social Sciences) and the Melbourne Institute. Although located outside Canberra, the February workshop was attended by 77 people, including national and international academic researchers and government departmental staff from a total of 27 different institutions. There were 13 contributed papers, one invited paper from DEWR and a

From left: Ms Ha Vu, Dr Umut Oguzoglu and Dr Hielke Buddelmeyer

Keynote Address from Professor Alison Booth (Australian National University and University of Essex). Professor Booth focussed on the existence of an employment-related ‘glass ceiling’ for women in Australia and Europe, suggesting that the average gender pay gap in these countries is mainly due to the gender gap towards the top of the wages distribution. Finally, Professor Eric Hanushek (Stanford University) addressed the dinner on the importance of the quality of education.

Education and Skills Mismatches in the Labour Market Workshop LESP invited 20 prominent researchers, including Professor Peter Sloane (Swansea University), Professor Paul Miller (University of Western Australia) and Professor Bruce Chapman (Australian National University), and policy makers from a number of government departments (including the Department of Education, Science and Training, Productivity Commission, Victorian Department of Education, and National Centre for Vocational Education Research), to a one-day workshop in May to examine education and skill mismatches in the labour markets of Australia and the United Kingdom. There was particular focus on the incidence and causes of mismatch. A policy distillation of the contents of the workshop appeared as a Policy Forum in the Australian Economic Review of September 2007.

FEE-HELP Workshop A FEE-HELP Workshop was held in Canberra on 11 December, jointly organised by Professor Bruce Chapman (Crawford School of Public Policy, Australian National University) and Professor Kostas Mavromaras (Melbourne Institute). The workshop explored the theoretical, empirical and policy issues surrounding the extension of FEE-HELP to areas of higher education not previously covered by HECS. Mr Andrew Norton (Centre for Independent Studies, Sydney) and Professor John Quiggin (University of Queensland) were keynote speakers. A roundtable discussion was led by Professor Stephen King (Australian Competition and Consumer Commission).

From left: Dr Julia Witt and Dr Sung-Hee Jeon

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Melbourne Institute Forums Economics Forum in Melbourne The Melbourne Institute Economics Forum in Melbourne entered its 10th year in 2007 and generated considerable interest. Luncheons were held on 17 April and 6 September at the Sofitel Melbourne and 28 June and 29 November at the Park Hyatt. A particular policy issue was covered and discussed at each forum. The forums were chaired by Adjunct Professor Alison McClelland (Department of Planning and Community Development, Victoria), Mr Phil Ruthven (IBISWorld) and Mr Tony Cole (Mercer (Australia) Pty Ltd). Topics and speakers in 2007 were:

Public Economics Forum in Canberra In 2007 the Melbourne Institute Public Economics Forum in Canberra continued into its ninth year and maintained very strong interest levels. Luncheons were held on 19 April at Old Parliament House in Canberra and on 26 June, 11 September and 27 November at the Hyatt Hotel. A particular policy issue was covered and discussed at each forum. The forums were chaired by Dr Ken Henry (Department of the Treasury) and Dr Peter Boxall (Department of Employment and Workplace Relations). Topics and speakers in 2007 were:

Climate Change: Some Economic Policy Issues (17 April)

Climate Change: Some Economic Policy Issues (19 April)

Associate Professor Elizabeth Webster (Melbourne Institute)

Professor Warwick McKibbin (The Australian National University)

Professor John Freebairn (The University of Melbourne)

Professor Philip Adams (Monash University)

Working Time and the Workâ&#x20AC;&#x201C;Life Balance (28 June) Professor Mark Wooden (Melbourne Institute) Mr Paul Shepanski (Relationships Forum Australia) Dr Sarah Squire (Human Rights and Equal Opportunity Commission) The Outlook for the Australian Economy (6 September) Mr Tony Pensabene (Australian Industry Group) Dr Alan Oster (National Australia Bank) Professor Guay Lim (Melbourne Institute)

Working Time and the Workâ&#x20AC;&#x201C;Life Balance (26 June) Professor Mark Wooden (Melbourne Institute) Mr Paul Shepanski (Relationships Forum Australia) The Hon. John von Doussa QC (Human Rights and Equal Opportunity Commission) The Outlook for the Australian Economy (11 September) Mr Tony Pensabene (Australian Industry Group) Mr Michael Blythe (Commonwealth Bank of Australia) Professor Guay Lim (Melbourne Institute)

Housing Affordability: Is There Really a Crisis? (29 November)

Housing Affordability: Is There Really a Crisis? (27 November)

Mr Paul Braddick (ANZ Banking Group)

Dr Ron Silberberg (Housing Industry Association)

Dr Gary Marks (Melbourne Institute)

Mr Paul Braddick (ANZ Banking Group)

Mr Chris Lamont (Housing Industry Association)

Professor Stephen Sedgwick (Melbourne Institute)

Dr Ken Henry at a Melbourne Institute Public Economics Forum

16 MELBOURNE INSTITUTE OF APPLIED ECONOMIC AND SOCIAL RESEARCH Annual Report 2007 and Outlook 2008

Our Schools...Our Future Conference On 15 November, the Melbourne Institute and The Australian held a one-day conference on education. This conference brought together the latest evidence about how well our schools are performing, how to improve their performance when necessary and how to ensure that the needs of all students are addressed so that all have the opportunity to successfully complete year 12 or its vocational equivalent. A key theme that emerged was the central importance of teachers, school culture and teacher preparation and development. The conference brought together leading politicians, teachers, academics and other experts. It presented evidence on school performance and generated discussion of policy options for making our schools better. The conference also included the federal election debate on education between the then federal education minister (The Hon. Julie Bishop MP) and the then shadow education minister (The Hon. Stephen Smith MP).

Speakers and Chairs The Hon. Julie Bishop MP (Minister for Education, Science and Training) Ms Jennifer Buckingham (The Centre for Independent Studies) Professor Gerald Burke (Monash University) Mr Patrick Coleman (Business Council of Australia) Professor Glyn Davis (The University of Melbourne) Professor Peter Dawkins (Victorian Department of Education and Early Childhood Development) Dr Kevin Donnelly (Education Strategies) Professor Kwong Lee Dow (The University of Melbourne) Mr Stephen Elder (Catholic Education Office, Archdiocese of Melbourne) Dr Wendy Jarvie (Department of Education, Science and Training) Dr Tom Karmel (National Council for Vocational Education Research) Ms Linda Lorenza (The Bell Shakespeare Company) Professor Bill Louden (The University of Western Australia) Professor Barry McGaw (The University of Melbourne) The Hon. Bronwyn Pike MP (Victorian Minister for Education) Dr Chris Ryan (The Australian National University) Dr Chris Sarra (Queensland University of Technology) Professor Stephen Sedgwick (Melbourne Institute)

From left: Professor Stephen Sedgwick, The Hon. Stephen Smith MP, The Hon. Julie Bishop MP, Professor Glyn Davis and Mr Michael Stutchbury

The sessions covered by the conference were: Teachers and Teaching; The Performance of Schools; Education Election Debate; Making a Difference in Difficult Circumstances; and Maximising Successful School Completion. The sessions were attended by 130 delegates. The conference was covered extensively in The Australian and other media with the election debate filmed and broadcast on Sky News.

The Hon. Stephen Smith MP (Shadow Minister for Education and Training) Associate Professor Christine Ure (The University of Melbourne) Mrs Sheree Vertigan (Australian Secondary Principals Association Inc. and Reece High School) Mr Greg Whitby (Catholic Schools in the Diocese of Parramatta)

Some of the presentations from the conference are available from the Melbourne Institute website, <www.melbourneinstitute.com>.

The federal election debate

www.melbourneinstitute.com 17

Advisory Board, 2007 Chairperson Mr Tony Cole AO, Business Leader for Investment Consulting in Asia Pacific, Mercer (Australia) Pty Ltd

Members Professor Margaret Abernethy, Dean, Faculty of Economics and Commerce, The University of Melbourne Ms Carol Austin, Investment Services Director, Contango Asset Management

Mr Grant Hehir, Secretary, Department of Treasury and Finance, Victoria Dr Christopher Kent, Head of Economic Research, Reserve Bank of Australia Professor Guay Lim, Professorial Research Fellow, Melbourne Institute Adjunct Professor Alison McClelland, Executive Director, Strategic Policy and Research Unit, Department of Planning and Community Development, Victoria

Mr Gary Banks, Chairman, Productivity Commission

Professor John McKenzie, Deputy Vice-Chancellor (Research), The University of Melbourne

Dr Peter Boxall, Secretary, Department of Employment and Workplace Relations

Professor Kostas Mavromaras, Professorial Research Fellow, Melbourne Institute

Professor Max Corden, Professorial Fellow, Department of Economics, The University of Melbourne

Mr Tony Nicholson, Executive Director, Brotherhood of St Laurence

Ms Rachel Derham, Business Manager, Melbourne Institute

Mr Phil Ruthven, Chairman, IBISWorld

Mr Bill Evans, General Manager, Economics, Westpac Banking Corporation

Professor Stephen Sedgwick, Director, Melbourne Institute

Dr Jeff Harmer, Secretary, Department of Families, Community Services and Indigenous Affairs

Associate Professor Elizabeth Webster, Principal Research Fellow, Melbourne Institute Professor Mark Wooden, Deputy Director and Professorial Research Fellow, Melbourne Institute

The Senior Management team

18 MELBOURNE INSTITUTE OF APPLIED ECONOMIC AND SOCIAL RESEARCH Annual Report 2007 and Outlook 2008

Our Staff, 2007 Directors Professor John Freebairn MAgEc NE PhD Davis FASSA (until 5 April 2007) Professor Stephen Sedgwick BEc Hons Sydney MSc (Economics) London (from 1 August 2007)

Research Staff

Dr Chin Nam Low BSc Hons MSc London PhD Monash (until 14 September 2007) Dr Seamus McGuinness BSc (Eco) MSc Queen’s PhD Belfast (until 1 June 2007) Dr Umut Oguzoglu MA PhD Guelph Dr Alfons Palangkaraya BSc UMo MA Penn St PhD Ore St Ms Stefanie Schurer MSc (Eco) York (from 12 November 2007)

Professorial Research Fellows

Dr Rosanna Scutella BCom Hons PhD Melb

Professor Guay Lim BEc MEc PhD ANU (Director, Applied Macroeconomics)

Dr Penelope Smith BEc Hons UWA MCom PhD Melb (until 20 April 2007)

Professor Kostas Mavromaras BA Hons Piraeus DPhil York (Director, Labour Economics and Social Policy)

Dr Lei Lei Song BA E.China MSc Wuhan MEc W’gong PhD Melb (until 5 April 2007)

Professor Anthony Scott BA Hons Newcastle MSc York PhD Aberdeen

Dr Sarantis Tsiaplias BCom Hons/LLB Deakin PhD Melb (from 7 May 2007)

Professor Mark Wooden BEc Hons Flinders MSc London (Deputy Director and Director, HILDA Project)

Ms Nicole Watson BSc UWA GDipMgtSc Canberra MMedStat Newcastle (Deputy Director Survey Management, HILDA Project)

Principal Research Fellows Associate Professor Bruce Headey BA Oxf MA Wisc PhD Strath (Deputy Director Research, HILDA Project) (until 30 June 2007)

Dr Julia Witt BA Hons Toronto MA PhD Guelph

Associate Professor Guyonne Kalb MEc Erasmus PhD Monash

Mr Paul Agius BA GDipSoc LaT MSc (Applied Statistics) Swinburne (HILDA Database Support Officer)

Associate Professor Elizabeth Webster BEc Hons MEc Monash PhD Camb (Director, Applied Microeconomics)

Research Officers

Mr David Black BCom Hons Melb

Senior Research Fellows

Ms Yin King Fok BCom Hons Melb (from 1 February 2007)

Dr Paul Jensen BEc Sydney PhD UNSW

Mr Clinton Hayes BSc Hons Otago (HILDA Survey Methodologist) (from 8 January 2007)

Dr Yi-Ping Tseng BEc Taiwan PhD ANU Dr Roger Wilkins BCom Hons MCom Melb MSc Wisc PhD Melb (Deputy Director Research, HILDA Project) (from 1 July 2007)

Ms Anne Leahy BCom GCertClassics Melb (Survey Manager)

Dr Jongsay Yong BA BSocSc Hons MSocSc NUS MA PhD Brit Col

Ms Ha Vu BEc Newcastle Hons ANU

Research Fellows

Ms Diana Warren BCom MCom Hons W’gong

Dr Hielke Buddelmeyer MA Vrije PhD NYU Dr Lixin Cai BEd Henan MA Renmin MEc PhD ANU Dr Michael Chua BEc Hons PhD UNE

Mr Mark van Zijll de Jong BCom Hons Lincoln

Research Assistants Ms Leanne Ellis BSocSci RMIT (from 17 September 2007) Ms Kerry Ware

Dr Edda Claus BA (Eco) McGill PhD ANU (from 22 October 2007) Mr Simon Freidin BBSc Hons GradDipCompSc LaT (HILDA Survey Database Manager and Analyst) Ms Alison Goode BA Hons Newcastle Upon Tyne MSc Aberdeen Dr Nicolas Hérault BSc (Eco) MSc (Eco) PhD Bordeaux (from 5 March 2007) Dr Sung-Hee Jeon BA Ewha Womans MA PhD York (Toronto) Dr Wang-Sheng Lee BA (Eco) Colby MA Michigan PhD Melb

www.melbourneinstitute.com 19

Professional Staff

PhD Students

Business Manager

Passed

Ms Rachel Derham BSc Melb

Wang-Sheng Lee Sarantis Tsiaplias

Publications Manager Ms Nellie Lentini BA Monash

In Progress (Melbourne Institute Students)

Communications and Publicity Manager

David Black Yin King Fok Matthew Forbes Yashar Gedik Andreas Stierwald Mark van Zijll de Jong

Ms Laura Aâ&#x20AC;&#x2122;Bell

Functions Manager Ms Penelope Hope BA LaT

Finance and Resources Manager Ms Theresa Goh BBus (Bus Admin) MPA RMIT (from 12 November 2007)

Finance Officer Mr Chris Bowden BA/BSc Monash MCom Deakin (until 8 June 2007)

Computing Systems Officer Mr Woei Tian Liew BSc MSc LaT GDipEc Melb

Executive Assistant to the Director Ms Tess Gross BA Hons Dip Ed Melb (from 23 July 2007)

Administrative Officer, Labour Economics and Social Policy Mrs Paula Madsen (from 12 March 2007)

Administrative Assistants, HILDA Ms Philippa Moore BA Hons UTas (until 20 April 2007) Ms Nicky Auster BA Monash (from 16 April 2007)

Administrative Assistants Ms Michelle Best BEnvSc LaT Ms Michelle Wilson BA Hons Melb

Ha Vu Diana Warren

In Progress (External Students) Catherine Bao (Department of Economics, The University of Melbourne) Omar Bashar (Department of Economics, The University of Melbourne) Patricia Fernandes (Health Economics Research Unit, University of Aberdeen) Sze-Young Lim (Department of Economics, The University of Melbourne) Jui Saprungrueng (Department of Economics, The University of Melbourne) Russell Thomson (Division of Economics, Research School of Pacific and Asian Studies, The Australian National University) Vicar Valencia (Department of Economics, The University of Melbourne) Chris Wiew (School of Population Health, The University of Melbourne)

Some members of the Administrative team

20 MELBOURNE INSTITUTE OF APPLIED ECONOMIC AND SOCIAL RESEARCH Annual Report 2007 and Outlook 2008

Honorary Appointments Adjunct Professors Professor Jeff Borland MA PhD Yale FASSA (Department of Economics, The University of Melbourne) Professor John Creedy BSc (Eco with Stats) Brist BPhil (Eco) Oxf FASSA (Truby Williams Chair of Economics, Department of Economics, The University of Melbourne) Professor Bill Griffiths BAgEc Hons UNE PhD Illinois FASSA (Professor of Econometrics, Department of Economics, The University of Melbourne)

Professorial Fellows Professor Robert Drago BS Tulsa MA PhD Mass/Am (Professor of Labor Studies and Women’s Studies, Pennsylvania State University)

Wang-Sheng Lee was awarded his PhD in 2007

Professor Alan Duncan BA Hons Manc DPhil York (Professor of Microeconomics, School of Economics, The University of Nottingham) Professor Peter Sloane BA (Eco) Hons Sheffield PhD Strathclyde FRSA FRSE (Director, Welsh Economy and Labour Market Evaluation Centre (WELMERC), Swansea University) Professor Ross Williams BCom Melb MScEc PhD London FASSA

Principal Fellows Dr Ernst Boehm AUA BEc Hons MEc Adel MCom Melb DPhil Oxf Dr Mark Crosby BEc Hons Adel MA PhD Queen’s (Associate Professor – Economics, Melbourne Business School) Dr Gary Marks BSc Hons MSc Melb PhD Qld Associate Professor Michael Shields BA Hons Stafford MSc Health York PhD Leic (Associate Professor and Reader, Department of Economics, The University of Melbourne)

Ha Vu, Melbourne Institute PhD student

Senior Fellows Dr Denise Doiron BA Monc MA PhD UBC (Department of Economics, The University of New South Wales) Dr Mark Rogers BSc London MSc Warw PhD ANU (Harris Manchester College, Oxford University)

www.melbourneinstitute.com 21

Staff Publications, 2007 Books and Monographs Buddelmeyer H, Creedy J and Kalb G. 2007. Tax Policy Design and Behavioural Microsimulation Modelling. Cheltenham, United Kingdom: Edward Elgar Publishing. Jensen P. 2007. Public Sector Outsourcing Contracts: The Impact of Uncertainty, Incentives and Transaction Costs on Contractual Relationships. Germany: VDM Press, Verlag.

French F, Ikenwilo D & Scott A. 2007. What Influences the Job Satisfaction of Staff and Associate Specialist Hospital Doctors? Health Services Management Research. 20 (3): 153–161. Frick J, Jenkins S, Lillard D, Lipps O & Wooden M. 2007. The Cross-National Equivalent File (CNEF) and Its Member Country Household Panel Studies. Schmollers Jahrbuch. 127 (4): 627–654.

Book Chapters

Headey B. 2007. Happiness: Revising Set-Point Theory and Dynamic Equilibrium Theory to Account for Long Term Change. Schmollers Jahrbuch. 127 (1): 85–94.

Stein J & Lim G. 2007. Asian Crises: Theory, Evidence and Warning Signals, in Debt, Risk and Liquidity in Futures Markets, Goss B (ed). New York, United States: Routledge, 18–45.

Headey B & Grabka M. 2007. Pets and Human Health in Germany and Australia: National Longitudinal Results. Social Indicators Research. 80 (2): 297–311.

Williams R. 2007. Broadening the Criteria: Lessons from the Australian Rankings, in The World-Class University and Ranking: Aiming Beyond Status, Sadlak J & Cai LN (eds). Bucharest, Romania: UNESCO, 205–222.

Heitmeuller A & Mavromaras K. 2007. On the Post-Unification Development of Public and Private Pay in Germany. Manchester School. 75 (4): 422–444.

Journal Articles – Refereed Bell DNF, Elliott R, Ma A, Scott A & Roberts E. 2007. The Pattern and Evolution of Geographic Wage Differentials in the Public and Private Sectors of Great Britain. Manchester School. 75 (4 (special issue)): 386–421. Bond CM, Fish A, Porteous T, Reid J, Scott A & Antonazzo E. 2007. A Randomised Controlled Study to Quantify the Benefits of Community Pharmacist Interventions on the Long Term Prescribing of Cardiovascular Drugs in General Practice. International Journal of Pharmacy Practice. 15 (1): 39–46. Bond CM, Jaffray M, Watson MC, Bissell P, Anderson C, Scott A, Lee A, Blenkinsop A, Tinelli M, Hannaford P, Krska J & Avery A. 2007. The MEDMAN Study: A Randomised Controlled Trial of Community Pharmacy-Led Medicines Management for Patients with Coronary Heart Disease. Family Practice. 24 (2): 189–200. Borland J & Tseng Y. 2007. Does a Minimum Job Search Requirement for the Unemployed Reduce Their Time on Welfare Payments? Evidence from the Job Seeker Diary in Australia. Industrial and Labor Relations Review. 60 (3): 357–378. Cai L, Vu H & Wilkins R. 2007. Disability Support Pension Recipients: Who Gets Off (and Stays Off) Payments? Australian Economic Review. 40 (1): 37–61. Chua M & Suardi S. 2007. Markov-Switching Mean Reversion in Short-Term Interest Rates: Evidence from East Asian Economies. Economic Record. 83 (263): 383–397. Creedy J, Kalb G & Kew HY. 2007. Confidence Intervals for Policy Reforms in Behavioural Tax Microsimulation Modelling. Bulletin of Economic Research. 59 (1): 37–65. Crossley F & Jeon S. 2007. Joint Taxation and the Labour Supply of Married Women: Evidence from the Canadian Tax Reform of 1988. Fiscal Studies. 28 (3): 343–365. Drago R, Scutella R & Pirretti A. 2007. Work and Family Directions in the US and Australia: A Policy Research Agenda. Journal of Industrial Relations. 49 (1): 49–66. Elliott F, Ma H, Scott A, Bell D & Roberts E. 2007. Geographically Differentiated Pay in the Labour Market for Nurses. Journal of Health Economics. 26: 190–212.

Hérault N. 2007. Trade Liberalisation, Poverty and Inequality in South Africa: A CGE-Microsimulation Analysis. Economic Record. 83 (262): 317–328. Hoy M & Witt J. 2007. Welfare Effects of Banning Genetic Information in the Life Insurance Market: The Case of the BRCA1/2 Genes. Journal of Risk and Insurance. 74 (3): 523–546. Ikenwilo D & Scott A. 2007. The Effect of Pay and Job Satisfaction on the Labour Supply of Hospital Consultants. Health Economics. 16 (12): 1303–1308. Jensen P & Webster E. 2007. Is Stern Correct? Does Climate Change Require Policy Intervention? Australian Economic Review. 40 (4): 421–431. Jeon S & Hurley J. 2007. The Relationship between Physician Hours of Work, Service Volume and Service Intensity. Canadian Public Policy. 33: 17–29. Kalb G. 2007. Interaction of the Tax and Social Security Systems in Australia: The Effect on Effective Marginal Tax Rates. Australian Economic Review. 40 (2): 186–193. Kalb G & Lee W. 2007. The Effect of an Alternative Childcare Subsidy on Labour Supply: A Policy Simulation. Australian Journal of Labour Economics. 10 (1): 39–57. Lee W & Oguzoglu U. 2007. Income Support and Stigma Effects for Young Australians. Australian Economic Review. 40 (4): 369–384. Lim G & McNelis P. 2007. Central Bank Learning, Terms of Trade Shocks and Currency Risk: Should Only Inflation Matter for Monetary Policy? Journal of International Money and Finance. 26 (6): 865–886. Lim G & McNelis P. 2007. Inflation Targeting, Learning and Q-Volatility in Small Open Economies. Journal of Economic Dynamics and Control. 31 (11): 3699–3722. Maani S & Kalb G. 2007. Childhood Economic Resources, Academic Performance, and the Choice to Leave School at Age Sixteen. Economics of Education Review. 26 (3): 361–374. McGuinness S & Bennett J. 2007. Overeducation and the Graduate Labour Market: A Quantile Regression Approach. Economics of Education Review. 26: 521–531.

22 MELBOURNE INSTITUTE OF APPLIED ECONOMIC AND SOCIAL RESEARCH Annual Report 2007 and Outlook 2008

McGuinness S & Freebairn J. 2007. Who Are the Low Paid? Australian Journal of Labour Economics. 10 (1): 17–38. Marks, G. 2007. Detrimental Effects of Living with a Grandparent: Cross-National Evidence. Journal of Comparative Family Studies. 38 (1): 167–177. Marks, G. 2007. Do Schools Matter for Early School Leaving? Individual and School Influences in Australia. School Effectiveness and School Improvement. 18 (4): 429–450. Mavromaras K, McGuinness S & Wooden M. 2007. Overskilling in the Australian Labour Market. Australian Economic Review. 40 (3): 307–312. Naccarella L, Southern D, Furler J, Scott A, Prosser L, Young D, Swerissen H & Waters E. 2007. Reforming Primary Care in Australia: A Narrative Review of the Evidence from Five Comparator Countries. Australian Journal of Primary Health. 13 (2): 38–45. Palangkaraya A & Yong J. 2007. How Effective Is ‘Lifetime Health Cover’ in Raising Private Health Insurance Coverage in Australia? An Assessment Using Regression Discontinuity. Applied Economics. 39 (11): 1361–1374. Scott A, Bond M, Inch J & Grant A. 2007. Preferences of Community Pharmacists for Extended Roles in Primary Care. A Survey and Discrete Choice Experiment. Pharmacoeconomics. 25 (9): 783–792. Scott A & Coote W. 2007. Whither Divisions of General Practice? An Empirical and Policy Analysis of the Impact of Divisions in the Australian Health Care System. Medical Journal of Australia. 187 (2): 185–199. Scott A, Tinelli M & Bond M. 2007. The Costs of a Community Pharmacist-Led Medicines Management Service for Patients with Coronary Heart Disease (CHD). Pharmacoeconomics. 25 (5): 397–411. Watson N. 2007. Using Imputed Data: Examples from the HILDA Survey. Australian Economic Review. 40 (4): 453–461. Webster E, Buddelmeyer H & Jensen P. 2007. Innovation and Industrial Evolution. Australian Economic Review. 40 (1): 82–89. Webster E, Palangkaraya A & Jensen P. 2007. Characteristics of International Patent Application Outcomes. Economics Letters. 95: 362–368. Wilkins R. 2007. The Changing Socio-Demographic Composition of Poverty in Australia: 1982 to 2004. Australian Journal of Social Issues. 42 (4): 481–501. Wilkins R. 2007. The Consequences of Underemployment for the Underemployed. Journal of Industrial Relations. 49 (2): 247–276. Williams R & Van Dyke N. 2007. Measuring the International Standing of Universities with an Application to Australian Universities. Higher Education. 53 (6): 819–841. Wiseman V, Scott A, McElroy B, Conteh L & Stevens W. 2007. Determinants of Bed Net Use in the Gambia: Implications for Malaria Control. American Journal of Tropical Medicine and Hygiene. 76 (5): 830–836.

Wooden M & Watson N. 2007. The HILDA Survey and Its Contribution to Economic and Social Research (So Far). Economic Record. 83 (261): 208–231. Wooden M, Wilkins R & McGuinness S. 2007. Minimum Wages and the Working Poor. Economic Papers. 26 (4): 295–307.

Journal Articles – Non Refereed Elliott F, Mavromaras K & Meures D. 2007. Special Issue on Public Sector Pay Structures and Regional Competitiveness: Editors’ Introduction. Manchester School. 75 (4): 373–385. Mavromaras K & McGuinness S. 2007. Education and Skill Mismatches in the Labour Market: Editors’ Introduction. Australian Economic Review. 40 (3): 279–285. Wooden M. 2007. Does the Fair Pay Commission Decision Matter? Insights: Melbourne Economics and Commerce. 1 (April): 28–30.

Refereed Conference Proceedings Black D, Tseng Y & Wilkins R. 2007. Do Demographic Characteristics Explain Declining Male Employment Rates? Examination of the Australian Case Using a Propensity Score Re-weighting Decomposition Approach. Proceedings of the 36th Australian Conference of Economists. Australia: Economic Society of Australia. Cai L & Liu A. 2007. Union Wage Effects in Australia: Are There Variations in Distribution? Proceedings of the 36th Australian Conference of Economists. Australia: Economic Society of Australia. Chua M & Low C. 2007. Permanent Structural Change in the US Short-Term and Long-Term Interest Rates. Proceedings of the 36th Australian Conference of Economists. Australia: Economic Society of Australia. Creedy J, Hérault N & Kalb G. 2007. Comparing Welfare Change Measures with Income Change Measures on Behavioural Policy Simulations. Proceedings of the 36th Australian Conference of Economists. Australia: Economic Society of Australia. Drago R, Wooden M & Black D. 2007. Long Work Hours: Volunteers and Conscripts. Proceedings of the HILDA Survey Research Conference 2007. Australia: Melbourne Institute of Applied Economic and Social Research. Jeon S. 2007. The Impact of Lifecycle Events on Women’s Labour Force Transition: A Panel Analysis. Proceedings of the 36th Australian Conference of Economists. Australia: Economic Society of Australia. Kalb G & Buddelmeyer H. 2007. Labour Supply and Welfare Participation in the Australian Population: Using Observed Job Search to Account for Involuntary Unemployment. Proceedings of the 36th Australian Conference of Economists. Australia: Economic Society of Australia. Leahy A, Palangkaraya A & Yong J. 2007. Geographical Agglomeration in Australian Manufacturing. Proceedings of the 36th Australian Conference of Economists. Australia: Economic Society of Australia.

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Mavromaras K, McGuinness S & Fok YK. 2007. Assessing the Incidence and Wage Effects of Over-Skilling in the Australian Labour Market. Proceedings of the 36th Australian Conference of Economists. Australia: Economic Society of Australia. Mavromaras K, Theodossiou I, Tseng Y & Warren D. 2007. Patterns of Flexible Retirement in Australia. Proceedings of the 36th Australian Conference of Economists. Australia: Economic Society of Australia.

Melbourne Institute Working Papers

Kalb G & Maani S. 2007. The Importance of Observing Early School Leaving and Usually Unobserved Background and Peer Characteristics in Analysing Academic Performance, Melbourne Institute of Applied Economic and Social Research Working Paper No. 5/07. Kalb G & Thoresen T. 2007. The Case for Labour Supply Incentives: A Comparison of Family Policies in Australia and Norway, Melbourne Institute of Applied Economic and Social Research Working Paper No. 27/07.

Cai L. 2007. Effects of Health on Wages of Australian Men, Melbourne Institute of Applied Economic and Social Research Working Paper No. 2/07.

Leahy A, MacLaren D, Morgan D, Weatherall K, Webster E & Yong J. 2007. In the Shadow of the China–Australia FTA Negotiations: What Australian Business Thinks about IP, Melbourne Institute of Applied Economic and Social Research Working Paper No. 26/07.

Cai L. 2007. The Relationship between Health and Labour Force Participation: Evidence from a Panel Data Simultaneous Equation Model, Melbourne Institute of Applied Economic and Social Research Working Paper No. 1/07.

Leahy A, Palangkaraya A & Yong J. 2007. Geographical Agglomeration in Australian Manufacturing, Melbourne Institute of Applied Economic and Social Research Working Paper No. 11/07.

Cai L & Liu A. 2007. Union Wage Effects in Australia: Are There Variations in Distribution?, Melbourne Institute of Applied Economic and Social Research Working Paper No. 17/07. Chua M, Dixon R & Lim G. 2007. What Drives Worker Flows?, Melbourne Institute of Applied Economic and Social Research Working Paper No. 34/07. Chua M & Low C. 2007. Permanent Structural Change in the US Short-Term and Long-Term Interest Rates, Melbourne Institute of Applied Economic and Social Research Working Paper No. 22/07. Creedy J, Hérault N & Kalb G. 2007. Comparing Welfare Change Measures with Income Change Measures in Behavioural Policy Simulations, Melbourne Institute of Applied Economic and Social Research Working Paper No. 21/07. Freebairn, J. 2007. Some Policy Issues in Providing Retirement Incomes, Melbourne Institute of Applied Economic and Social Research Working Paper No. 6/07. Goode A. 2007. Recall Bias in Reported Events: HILDA, Waves 1–5, Melbourne Institute of Applied Economic and Social Research HILDA Discussion Paper 2/07.

Lee W. 2007. Immigration and Wages: An Open Economy Model, Melbourne Institute of Applied Economic and Social Research Working Paper No. 7/07. Lee W & Oguzoglu U. 2007. Are Youths on Income Support Less Happy? Evidence from Australia, Melbourne Institute of Applied Economic and Social Research Working Paper No. 3/07. Lee W & Oguzoglu U. 2007. Well-Being and Ill-Being: A Bivariate Panel Data Analysis, Melbourne Institute of Applied Economic and Social Research Working Paper No. 28/07. McGuinness S & Freebairn J. 2007. Who Are the Low Waged?, Melbourne Institute of Applied Economic and Social Research Working Paper No. 8/07. McGuinness S & Wooden M. 2007. Overskilling, Job Insecurity and Career Mobility: Evidence from Australia, Melbourne Institute of Applied Economic and Social Research Working Paper No. 9/07. Mavromaras K, McGuinness S & Fok Y. 2007. Assessing the Incidence and Wage Effects of Over-Skilling in the Australian Labour Market, Melbourne Institute of Applied Economic and Social Research Working Paper No. 32/07.

Jensen P, Palangkaraya A & Webster E. 2007. Delays in International Patent Application Outcomes, Melbourne Institute of Applied Economic and Social Research Working Paper No. 35/07.

Mavromaras K, McGuinness S, O’Leary N, Sloane P & Fok Y. 2007. The Problem of Overskilling in Australia and Britain, Melbourne Institute of Applied Economic and Social Research Working Paper No. 33/07.

Jensen P, Webster E & Witt J. 2007. Hospital Type and Patient Outcomes: An Empirical Examination Using AMI Re-admission and Mortality Records, Melbourne Institute of Applied Economic and Social Research Working Paper No. 31/07.

Oguzoglu U. 2007. Dynamics of Work Limitation and Work in Australia, Melbourne Institute of Applied Economic and Social Research Working Paper No. 10/07.

Kalb G. 2007. Children, Labour Supply and Childcare: Challenges for Empirical Analysis, Melbourne Institute of Applied Economic and Social Research Working Paper No. 15/07.

Oguzoglu U. 2007. Severity of Work Disability and Work, Melbourne Institute of Applied Economic and Social Research Working Paper No. 30/07.

Kalb G & Lee W. 2007. Childcare Use and Parents’ Labour Supply in Australia, Melbourne Institute of Applied Economic and Social Research Working Paper No. 13/07.

Palangkaraya A & Yong J. 2007. Exporter and Non-Exporter Productivity Differentials: Evidence from Australian Manufacturing Establishments, Melbourne Institute of Applied Economic and Social Research Working Paper No. 4/07.

Kalb G & Lee W. 2007. The Effect of an Alternative Childcare Subsidy on Labour Supply: A Policy Simulation, Melbourne Institute of Applied Economic and Social Research Working Paper No. 14/07.

Palangkaraya A & Yong J. 2007. Trade Liberalisation, Exit, and Output and Employment Adjustments of Australian Manufacturing Establishments, Melbourne Institute of Applied Economic and Social Research Working Paper No. 16/07.

24 MELBOURNE INSTITUTE OF APPLIED ECONOMIC AND SOCIAL RESEARCH Annual Report 2007 and Outlook 2008

Starick R & Watson N. 2007. Evaluation of Alternative Income Imputation Methods for the HILDA Survey, Melbourne Institute of Applied Economic and Social Research HILDA Discussion Paper 1/07.

Jensen PH & Webster E. 2007. Inter-generational Justice, Discount Rates and Climate Change. A Report Commissioned for the Garnaut Climate Change Review, Department of Premier and Cabinet, Victoria.

Tsiaplias S. 2007. A Metropolis-in-Gibbs Sampler for Estimating Equity Market Factors, Melbourne Institute of Applied Economic and Social Research Working Paper No. 18/07.

Jones A & Schurer S. 2007. How Does Heterogeneity Shape the Socioeconomic Gradient in Health Satisfaction. Ruhr Economic Paper No. 8. Germany: RWI Essen.

Tsiaplias S. 2007. Co-movement and Integration among Developed Equity Markets, Melbourne Institute of Applied Economic and Social Research Working Paper No. 25/07.

Karanasos M & Schurer S. 2007. Is the Relationship between Inflation and Its Uncertainty Linear? Ruhr Economic Paper No. 18. Germany: RWI Essen.

Tsiaplias S. 2007. The Macroeconomic Content of Equity Market Factors, Melbourne Institute of Applied Economic and Social Research Working Paper No. 23/07.

Marks G. 2007. Income Poverty, Subjective Poverty and Financial Stress. Report for Department of Family and Community Services. Social Policy Research Paper No. 29, Department of Family, Community Services and Indigenous Affairs.

Warren D & Oguzoglu U. 2007. Retirement in Australia: A Closer Look at the Financial Incentives, Melbourne Institute of Applied Economic and Social Research Working Paper No. 24/07. Wilkins R. 2007. The Changing Socio-Demographic Composition of Poverty in Australia: 1982 to 2004, Melbourne Institute of Applied Economic and Social Research Working Paper No. 12/07. Wooden M & Drago R. 2007. The Changing Distribution of Working Hours in Australia, Melbourne Institute of Applied Economic and Social Research Working Paper No. 19/07. Wooden M & Warren D. 2007. Paid Annual Leave and Working Hours, Melbourne Institute of Applied Economic and Social Research Working Paper No. 20/07. Wooden M, Warren D & Drago R. 2007. Working Time Mismatch and Subjective Well-Being, Melbourne Institute of Applied Economic and Social Research Working Paper No. 29/07.

Melbourne Institute Report Series Scott A & Coote W. 2007. The Value of the Divisions Network: An Evaluation of the Effect of Divisions of General Practice on Primary Care Performance, Melbourne Institute of Applied Economic and Social Research Report Series No. 8.

Other Reports and Working Papers Buddelmeyer H & Verick S. 2007. Understanding the Drivers of Poverty Dynamics in Australian Households. Discussion Paper No. 2827. Bonn, Germany: IZA.

Marks G. 2007. Course Completion and Post-University Destinations of Commencing University Students. Report for Department of Education, Science and Technology. LSAY Research Report No. 51. Mavromaras K, McGuinness S & Fok YK. 2007. Assessing the Incidence and Wage Effects of Over-Skilling in the Australian Labour Market. Discussion Paper No. 2837. Bonn, Germany: IZA. Scott A, Yong J, Freebairn J & Leahy A. 2007. Towards an Integrated Health Care System: Some Pragmatic Options for the Reform of the Australian Health Care System. Final Report to the Chifley Research Centre. Scutella R & Mestan K. 2007. Investing in People: Intermediate Labour Markets as Pathways to Employment. Brotherhood of St Laurence. Williams R. 2007. Ranking Australian Universities: Controlling for Scope. Melbourne Institute of Applied Economic and Social Research.

Research Higher Degree Theses Lee W. 2007. Aspects of Propensity Score Matching. Tsiaplias S. 2007. An Empirical Investigation into Equity Market Feedback and Momentum, Co-movement, and the Macroeconomic Content of Pricing Factors.

Farrar S, Sussex J, Yi D, Sutton M, Chalkley M, Scott A, Ma A & Yuen P. 2007. National Evaluation of Payment by Results. Final Report to the Department of Health (England). Fertig M & Schurer S. 2007. Labour Market Outcomes of Immigrants in Germany: The Importance of Heterogeneity and Attrition Bias. Ruhr Economic Paper No. 20. Germany: RWI Essen. Headey B & Warren D. 2007. Families, Incomes and Jobs, Volume 2: A Statistical Report on Waves 1 to 4 of the HILDA Survey. Melbourne Institute of Applied Economic and Social Research. Jensen PH, Leahy A & Webster E. 2007. IBM® – Melbourne Institute ‘Innovation Index of Australian Industry’. IBM and University of Melbourne.

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Seminars and Presentations, 2007 Black D. 2007. ‘Do Demographic Characteristics Explain Declining Male Employment Rates? Examination of the Australian Case Using a Propensity Score Re-weighting Decomposition Approach’, 36th Australian Conference of Economists, Hobart, 24–26 September. Buddelmeyer H. 2007. ‘Labour Supply and Welfare Participation in the Australian Population: Using Observed Job Search to Account for Involuntary Unemployment’, Melbourne Institute Workshop Series, 4 September and 36th Australian Conference of Economists, Hobart, 24–26 September. Buddelmeyer H. 2007. ‘Parent’s Perception of Their Children’s Weight’, Economics Program Seminar, Research School of Social Sciences, Australian National University, 25 May. Buddelmeyer H. 2007. ‘Transitions from Casual Employment in Australia’, HILDA Survey Research Conference, University of Melbourne, 19–20 July. Buddelmeyer H. 2007. ‘Use of Informal Childcare and Decisions on Work by Income Support Recipients’, Labour Market Dynamics Social Policy Research Workshop, Changing Nature of Work and Welfare, Canberra, 20–21 September. Cai L. 2007. ‘The Relationship between Health and Labour Force Participation: Evidence from a Panel Data Simultaneous Equation Model’, Econometric Society Australasian Meeting, University of Queensland, Brisbane, 3–6 July and EALE Annual Conference, Oslo, 20–22 September. Cai L. 2007. ‘Health and Labour Force Participation: Evidence from a Panel Data Simultaneous Equation Model’, Melbourne Institute Workshop Series, 19 June. Cai L. 2007. ‘Union Wage Effects in Australia: Are There Variations in Distribution?’, Melbourne Institute Workshop Series, 30 January; Australian Labour Market Research Workshop, University of Melbourne, 8–9 February; and 36th Australian Conference of Economists, Hobart, 24–26 September. Chua M. 2007. ‘Permanent Structural Changes in the US ShortTerm and Long-Term Interest Rate’, 36th Australian Conference of Economists, Hobart, 24–26 September. Claus E. 2007. ‘Equity Market Integration in the Asia Pacific: Evidence from Discount Factors’, 5th Infiniti Conference on International Finance, Trinity College, Dublin, 12 June.

Hérault N. 2007. ‘Comparing Welfare Change Measures with Income Change Measures on Behavioural Policy Simulations’, Melbourne Institute Workshop Series, 11 September and 36th Australian Conference of Economists, Hobart, 24–26 September. Jensen P. 2007. ‘Innovation, Technological Conditions and New Firm Survival’, European School of New Institutional Economics (ESNIE) Workshop, Cargese, Corsica, 21–25 May; Seminar at Economic and Social Research Institute (ESRI), Dublin, 14 August; NIFU–STEP, Oslo, 20 August; and Entrepreneurship, Institutions and Policies: The 2007 Ratio Colloquium for Young Social Scientists, 24–25 August. Jeon S. 2007. ‘Joint Taxation and the Labour Supply of Married Women: Evidence from the Canadian Tax Reform of 1988’, Melbourne Institute Workshop Series, 26 June and Econometric Society Australasian Meeting, University of Queensland, Brisbane, 3–6 July. Jeon S. 2007. ‘The Impact of Life-Cycle Events on Women’s Labour Force Transitions: A Panel Analysis’, 36th Australian Conference of Economists, Hobart, 24–26 September. Kalb G. 2007. ‘The Importance of Individual and Environment Characteristics in Analysing Students’ Year 10 Academic Achievement’, Seminar at the Department of Economics and Finance, Macquarie University, Sydney, 8 June. Kalb G. 2007. ‘Discussion of ‘Modelling the Demand-Side and Adjustment Paths’’, Treasury’s Discussion Forum, Labour Market Dynamics Social Policy Research Workshop, Changing Nature of Work and Welfare, Canberra, 20–21 September. Kalb G. 2007. ‘Location Economics of Income Support Recipients’, Labour Market Dynamics Social Policy Research Workshop, Changing Nature of Work and Welfare, Canberra, 20–21 September and Seminar at the Department of Employment and Workplace Relations, Canberra, 7 December. Kalb G. 2007. ‘The Case for Labour Supply Incentives: A Comparison of Family Policies in Australia and Norway’, Melbourne Institute Workshop Series, 14 August and First General Conference of the International Microsimulation Association, Vienna, 20–22 August.

Hayes C. 2007. ‘HILDA Standard Errors’, HILDA Survey Research Conference, University of Melbourne, 19–20 July.

Kalb G. 2007. ‘The Importance of Observing Early School Leaving and Usually Unobserved Background and Peer Characteristics in Analysing Academic Performance’, Econometric Society Australasian Meeting, University of Queensland, Brisbane, 3–6 July.

Headey B. 2007. ‘Financial Poverty in Australia: Developing a Valid Measure Based on Wealth, Income and Consumption for Use by Commonwealth and State Governments’, HILDA Survey Research Conference, University of Melbourne, 19–20 July.

Kalb G. 2007. ‘The Melbourne Institute Tax and Transfer Simulator (MITTS): A Behavioural Microsimulation Model’, Technical Workshop at the First General Conference of the International Microsimulation Association, Vienna, 20–22 August.

Headey B. 2007. ‘Mature Age Employment’, Labour Market Dynamics Social Policy Research Workshop, Changing Nature of Work and Welfare, Canberra, 20–21 September.

Kalb G. 2007. ‘Childcare Funding Models’, Invited Presentation, National Association of Community Based Children’s Services 25th Anniversary National Conference, Melbourne, 16 November.

Hérault N. 2007. ‘Building and Linking a Microsimulation Model to a CGE Model: The South African Microsimulation Model’, Conference on Agricultural Price Distortions, Inequality and Poverty, World Bank Headquarters, Washington DC, 16–17 November.

Lee W. 2007. ‘Evaluating the Effects of a Mandatory Government Program Using Matched Groups within a Similar Geographic Location’, Econometric Society Australasian Meeting, University of Queensland, Brisbane, 3–6 July and EALE Annual Conference, Oslo, 20–22 September.

26 MELBOURNE INSTITUTE OF APPLIED ECONOMIC AND SOCIAL RESEARCH Annual Report 2007 and Outlook 2008

Lee W. 2007. ‘On Assessing the Specification of Propensity Score Models’, 3rd Annual IZA Conference on the Evaluation of Labour Market Programs, Bonn, 19–20 October.

Schurer S. 2007. ‘Discussant of ‘The Private Information in SelfAssessed Health’’, European Workshop in Health Economics and Econometrics, 8 September.

Lee W. 2007. ‘Well-Being and Ill-Being: A Bivariate Panel Data Analysis’, Melbourne Institute Workshop Series, 13 November.

Schurer S. 2007. ‘How Does Heterogeneity Shape the Socioeconomic Gradient in Health Satisfaction’, Doctoral Conference of the Ruhr Graduate School in Economics, 28 February; Seminar at IHEA Copenhagen, 10 July; and Chair of Empirical Economics and Statistics, University of Zurich, 12 July.

Lim G. 2007. ‘Open Economies – Discussant’, Workshop on Monetary Policy, Reserve Bank of Australia, Sydney, 17 December. Low C. 2007. ‘Beveridge Nelson Decomposition with Markov Switching’, 27th International Symposium on Forecasting, New York, 24–27 June and Econometric Society Australasian Meeting, University of Queensland, Brisbane, 3–6 July. Low C. 2007. ‘Beveridge Nelson Decomposition: The State-Space Approach’, Melbourne Institute Workshop Series, 12 June. McGuinness S. 2007. ‘Overskilling, Job Security and Career Mobility’, Economics Program Seminar, Research School of Social Sciences, Australian National University, 29 May. Mavromaras K. 2007. ‘Assessing the Incidence and Wage Effects of Overskilling’, 36th Australian Conference of Economists, Hobart, 24–26 September. Mavromaras K. 2007. ‘Intergenerational Transmission of Healthy Eating Behaviour’, 29th Australian Conference of Health Economists, Brisbane, 27–28 September. Mavromaras K. 2007. ‘Melbourne Institute Update 2007’, Labour Market Dynamics Social Policy Research Workshop, Changing Nature of Work and Welfare, Canberra, 20–21 September. Mavromaras K. 2007. ‘Skill Shortages and Wage Pressures’, Labour Market Dynamics Social Policy Research Workshop, Changing Nature of Work and Welfare, Canberra, 20–21 September.

Scott A. 2007. ‘Do Regional Primary Care Organisations Influence Primary Care Performance?’, Melbourne Institute Workshop Series, 15 June. Scott A. 2007. ‘Incentives and the Quality of Primary Care in Australia. Do Divisions of General Practice Make a Difference?’, International Health Economics Association 6th World Congress: Explorations in Health, Copenhagen, 8–11 July; 29th Australian Conference of Health Economists, Brisbane, 27–28 September; and Seminar, Centre for Health Economics, Monash University, 5 December. Scott A. 2007. ‘Reforming the Health Care System: Old Problems and Untried Solutions’, Annual Public Seminar, Yarra Valley U3A, 16 October. Scott A. 2007. ‘The Value of the Divisions Network: Evaluating the Effect of Divisions on Primary Care Performance’, Seminar, Centre for Health Economics Research and Evaluation, University of Technology Sydney, 16 May and 2007 General Practice and Primary Health Care Conference: Working Together, Sydney, 23–25 May. Scott A. 2007. ‘The Value of the Divisions Network’, NSW Alliance of Divisions Conference, Sydney, 15 May.

Mavromaras K. 2007. ‘The Problem of Overskilling in Australia and UK’, Australian Labour Market Research Workshop, Curtin Business School, Perth, 3–4 December.

Scutella R. 2007. ‘Employment Retention and Advancement of Disadvantaged Jobseekers’, Australian Social Policy Conference, University of New South Wales, 15 July.

Oguzoglu U. 2007. ‘Dynamics of Work Limitation and Work in Australia’, Economics Program Seminar, Research School of Social Sciences, Australian National University, 8 June; Econometric Society Australasian Meeting, University of Queensland, Brisbane, 3–6 July; Melbourne Institute Workshop Series, 10 July; and 14th International Panel Data Conference, Xiamen University, Xiamen, China, 16–18 July.

Scutella R. 2007. ‘Improving Employment Retention and Advancement of Low-Paid Workers’, Low Paid Work in Australia: Realities and Responses Symposium, University of Melbourne, 17 October. Smith P. 2007. ‘What Caused the Great Moderation?’, Melbourne Institute Workshop Series, 6 March.

Oguzoglu U. 2007. ‘Lags and Leads in Severity’, Melbourne Institute Workshop Series, 27 November.

Stierwald A. 2007. ‘Productivity, Profitability and Stock Market Performance – The Case of ASX-Listed Companies’, Melbourne Institute Workshop Series, 29 May.

Oguzoglu U. 2007. ‘Severity of Work Disability and Work’, Australian Labour Economics Workshop, Curtin University, Perth, 3 December.

Tseng Y. 2007. ‘Patterns of Flexible Retirement in Australia’, 36th Australian Conference of Economists, Hobart, 24–26 September.

Palangkaraya A. 2007. ‘Disharmony in International Patent Office Decisions’, Invited Seminar, Faculty of Economics, Gakushuin University, Japan, 26 January. Palangkaraya A. 2007. ‘Hospital Competition and Efficiency’, Melbourne Institute Workshop Series, 22 May. Palangkaraya A. 2007. ‘Trade Liberalisation, Exit, and Output and Employment Adjustments of Australian Manufacturing Establishments’, DEGIT – XII, University of Melbourne, 29 June.

Vu H. 2007. ‘The Relationship between Labour Market Conditions and the Income Support Caseload’, Melbourne Institute Workshop Series, 1 June; Labour Market Dynamics Social Policy Research Workshop, Changing Nature of Work and Welfare, Canberra, 20–21 September; and 20th PhD Conference in Economics and Business, University of Western Australia, Perth, 31 October – 2 November. Warren D. 2007. ‘Financial Incentives Affecting the Retirement Decisions of Mature Age Australians’, Melbourne Institute Workshop Series, 5 June and HILDA Survey Research Conference, University of Melbourne, 19–20 July.

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Watson N. 2007. ‘Evaluation of Alternative Income Imputation Methods for the HILDA Survey’, HILDA Survey Research Conference, University of Melbourne, 19–20 July. Watson N. 2007. ‘Evaluation of Alternative Income Imputation Methods for a Longitudinal Survey’, International Conference for Panel Data Analyses: Employment and Quality of Life, Seoul, 25–26 October. Watson N. 2007. ‘Evaluation of Alternative Longitudinal Income Imputation Methods: The HILDA Experience’, 56th Session of the International Statistical Institute, Lisbon, 22–29 August and Goulburn 5, Series Organised by Centre for Statistical and Survey Methodology, University of Wollongong, 14 November. Webster E. 2007. ‘The Wealth of Nations: Where Does It Come From?’, Clever Collections Conference, Australian Partnership for Sustainable Repositories, University of Melbourne, 28 November. Webster E. 2007. ‘An Accounting Approach for Intangible Investments’, Intellectual Property Research Institute of Australia Seminar, University of Melbourne, 7 February; IPRIA Series, Brisbane, 15 February; and Macquarie Graduate School of Management, Sydney, 20 February. Webster E. 2007. ‘An Assessment of the ‘Stern Review’’, Seminar at Victorian Department of Sustainability and Environment, Melbourne, 12 February. Webster E. 2007. ‘Monitoring the ASEAN Community’, First Regional Workshop, ASEAN Community Progress Monitoring System, Bangkok, 1 August. Webster E. 2007. ‘Reviewing the ‘Stern Review’’, Melbourne Institute Economics Forum, Melbourne, 17 April and Australian Agricultural and Resource Economics Society (AARES), Melbourne, 7 June. Webster E. 2007. ‘Should Governments Be Concerned about Firm Survival?’, Productivity Commission, Melbourne, 7 March. Webster E. 2007. ‘The Process of Monitoring the ASEAN Community’, Second Regional Workshop ASEAN Community Progress Monitoring System, Jakarta, 7 November. Webster E. 2007. ‘Tier 2 Indicators for the ASEAN Community Monitoring System’, Second Regional Workshop ASEAN Community Progress Monitoring System, Jakarta, 7 November. Wilkins R. 2007. ‘Decomposing Changes in the Male Employment Rate in Australia: A Propensity Score Re-weighting Approach’, Melbourne Institute Workshop Series, 7 August and Australasian Labour Econometrics Workshop, Motu, Wellington, 9 August. Wilkins R. 2007. ‘Discussant for ‘Do Australians Work Longer Hours? A Review of Australian Annual Hours Worked Estimates’ by Joanne Baker and Paul Roberts’, Australian Labour Market Research Workshop, University of Melbourne, 8–9 February. Wilkins R. 2007. ‘Earnings Premia for Observed and Unobserved Skill in Australia: Evidence and Explanations’, Economics Program Seminar, Research School of Social Sciences, Australian National University, 6 July.

Williams R. 2007. ‘Measuring University Performance at the Discipline/Departmental Level’, Symposium on International Trends in University Rankings and Classifications, Griffith University, 12 February. Williams R. 2007. ‘Peer Opinion and Performance Measures: Measuring the International Standing of Australian Universities’, Invited Paper, 3rd Meeting of International Ranking Expert Group (IREG-3), Shanghai Jiao Tong University, Shanghai, 28–31 October. Witt J. 2007. ‘Comparing Quality of Care: Is It Meaningful?’, Victorian Department of Human Services, Melbourne, 17 April and Monash University, 9 May. Witt J. 2007. ‘Early Career Choices of Graduate Nurses: Does Relative Pay Matter?’, 29th Australian Conference of Health Economists, Brisbane, 27–28 September. Witt J. 2007. ‘Measuring Hospital Quality from Readmission and Death Records’, Seminar at Centre for Health Policy, Programs and Economics, School of Population Health, University of Melbourne, 7 August. Wooden M. 2007. ‘Long Work Hours: Volunteers and Conscripts’, HILDA Survey Research Conference, University of Melbourne, 19–20 July. Wooden M. 2007. ‘Long Work Weeks in Australia’, Labour Law Seminar, CELRL, University of Melbourne, 22 June and Australian Institute of Family Studies, Melbourne, 16 August. Wooden M. 2007. ‘Low Pay Dynamics’, Labour Market Dynamics Social Policy Research Workshop, Changing Nature of Work and Welfare, Canberra, 20–21 September. Wooden M. 2007. ‘The Changing Distribution of Working Hours in Australia, Australian and Japanese Labour Markets Compared’, Australian National University, 6 June. Wooden M. 2007. ‘The Future of the HILDA Survey: Opportunities and Challenges’, HILDA Survey Research Conference, University of Melbourne, 19–20 July. Wooden M. 2007. ‘The HILDA Survey and Its Contribution to Economic and Social Research’, Seminar at School of Economics, Australian National University, 29 March. Wooden M. 2007. ‘The HILDA Survey: An Overview’, CNEF Workshop, Cornell University, 8 September. Wooden M. 2007. ‘Working Time Mismatch and Subjective Wellbeing’, Melbourne Institute Workshop Series, 16 October. Yong J. 2007. ‘Geographical Agglomeration in Australian Manufacturing’, Melbourne Institute Workshop Series, 28 August and 36th Australian Conference of Economists, Hobart, 24–26 September. Yong J. 2007. ‘In the Shadow of the China–Australia FTA Negotiations: What Australian Business Thinks about IP’, IPRIA Seminar Series, University of Melbourne, 20 November. Yong J. 2007. ‘Parallel Imports, Market Size and Investment Incentive’, Symposium on Law, Institutions and Governance, Singapore, 6–7 August.

28 MELBOURNE INSTITUTE OF APPLIED ECONOMIC AND SOCIAL RESEARCH Annual Report 2007 and Outlook 2008

Publications by Subscription Melbourne Institute Journal

Table 2 Submissions, 2004 to 2007a

Australian Economic Review

Contributed papers

2004

2005

2006

2007

In 2007 the format of the Australian Economic Review (volume 40) remained unchanged, and continued to retain its strong emphasis on issues of contemporary policy relevance. A Policy Forum was published in each issue. The Policy Forums covered industry dynamics, the next wave of tax reform, education and skill mismatches in the labour market, and climate change. The contributed articles covered a diverse mix of topics. Each issue contained both a special article for tertiary students, and a data survey to highlight the availability and attributes of different databases. A summary of the composition of articles published in the Review in recent years is provided in Table 1. Table 2 provides information on the receipt and progress of, and decisions taken on, submissions of contributed articles in 2007, along with a comparison with earlier years. Over the year, 50 new articles were submitted. The backlog of accepted articles awaiting publication is now two issues.

Brought forward from previous yearb

New submissions during year

Accepted: Published

Accepted: In queue

Rejected/withdrawn

Resubmit

In process

Notes: (a) Contributed articles only. (b) Sum of acceptances in queue, re-submissions and articles in process.

Table 1 Published Articles, 2004 to 2007 Type of article

2004

2005

2006

2007

Invited Articles

Contributed Articles

Policy Forum

Data Surveys

For the Student

464

469

456

470

Pages

Decisions made

Melbourne Institute Economic and Social Indicators Westpac â&#x20AC;&#x201C; Melbourne Institute Indexes of Economic Activity Published monthly, the Westpac â&#x20AC;&#x201C; Melbourne Institute Indexes of Economic Activity examines movements in leading and coincident indicators of economic activity in Australia. Indexes of economic activity are designed to enhance the decision

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making process of financial and business managers as well as policy makers by anticipating and identifying turning points in the economy. Each index blends several variables which reflect different aspects of the economy; their combination is intended to give a more representative picture than would any one variable by itself.

Westpac – Melbourne Institute Survey of Consumer Sentiment The Consumer Sentiment Index is an average of five component indexes which reflect consumers’ evaluations of their household financial situation over the past year and the coming year, anticipated economic conditions over the coming year and the next five years, and buying conditions for major household items. Assessments about future unemployment are also recorded. This report is produced monthly.

Westpac – Melbourne Institute Survey of Consumer Sentiment: NSW, Victoria, Queensland, Western Australia, South Australia During 2007 key consumer sentiment data were published quarterly in relation to New South Wales, Victoria, Queensland, Western Australia and South Australia. In 2008, a revised version of this report will be published monthly.

Melbourne Institute Survey of Consumer Inflationary Expectations The consumer inflationary expectations measures are designed to represent the average householder’s expected rate of consumer price changes over the coming 12 months. The survey produces a direct measure of inflationary expectations as consumers are asked whether, and by how much, they believe prices will go up or down. The report is produced monthly.

Melbourne Institute Wages Report This report records employees’ (self-reported) wage changes over the previous 12-month period. This survey has been designed to capture the growth in wage rates per hour. It adds to our knowledge about wages and complements the ABS labour cost index. This report is produced quarterly.

Melbourne Institute Household Saving and Investment Report This survey-based report contains information about households’ current and future saving behaviour, their reasons for saving, the structure of household assets and debts, and households’ assessments of the best ways to invest savings. This report is produced quarterly.

Melbourne Institute Monthly Bulletin of Economic Trends The Melbourne Institute Monthly Bulletin of Economic Trends provides forecasts of the state of the Australian economy. Variables forecasted include the growth in GDP, consumption and the unemployment rate as well as the outlook for inflation, the 90-day bill rate and the exchange rate. The forecasts are generated using econometric techniques which combine both historical information and forward information contained in, for example, consumer expectations, leading indexes of economic activity, and financial futures. The monthly updates of forecasts for the ensuing four quarters provide timely ongoing information in advance of official quarterly data. The first report in this series will be released in 2008.

TD Securities – Melbourne Institute Monthly Inflation Gauge TD Securities and the Melbourne Institute have developed a monthly inflation indicator to give markets and policy makers a monthly update on inflation trends. Based on the methodology used by the Australian Bureau of Statistics to calculate the quarterly consumer price index, this publication estimates month-to-month price movements for a wide-ranging basket of goods and services across the main capital cities. This report is produced monthly.

Manpower – Melbourne Institute Employment Report This report provides forecasts of the growth in employment for Australia and the states of Victoria, New South Wales, Queensland, Western Australia, South Australia and Tasmania. The forecasts are based on a time series model which utilises historical information as well as exclusive forward information contained in surveys conducted by the Melbourne Institute and Manpower. The report contains both point and interval forecasts of expected employment. This report is updated monthly.

Poverty Lines: Australia Poverty Lines: Australia is a quarterly newsletter that updates the Henderson Poverty Line as defined in the 1973 Commonwealth Commission of Inquiry into Poverty. It is standard reference material for those concerned with social welfare policy in Australia. Minimum income levels required to avoid a situation of poverty are presented for a range of family sizes and circumstances. The updated poverty lines take into account changes in the average income level of all Australians, reflecting the idea that poverty is relative. Each issue includes a table indicating changes in the purchasing power of the poverty lines and a table comparing welfare payment levels with poverty lines for various family types.

30 MELBOURNE INSTITUTE OF APPLIED ECONOMIC AND SOCIAL RESEARCH Annual Report 2007 and Outlook 2008

Other Melbourne Institute Publications Household, Income and Labour Dynamics in Australia (HILDA) Survey Annual Report 2007 The Household, Income and Labour Dynamics in Australia (HILDA) Survey is a household-based panel survey, which aims to track all members of an initial sample of households over an indefinite life. Further, the sample is automatically extended over time by ‘following rules’ that add to the sample any new children of members of the selected households as well as new household members resulting from changes in the composition of the original households. Accompanying the release of the sixth wave of data from the HILDA Survey, the Annual Report provides information on the activities undertaken for the HILDA project thus far. Highlights from the wave 6 data, together with a list of publications and information on how to access the HILDA data, are included in the report.

Families, Incomes and Jobs, Volume 2: A Statistical Report on Waves 1 to 4 of the HILDA Survey The aim of the Household, Income and Labour Dynamics in Australia (HILDA) Survey is to provide, on an annual basis, a new type of social statistics for Australia – longitudinal panel statistics describing the ways in which people’s lives are changing. The Statistical Report of the HILDA Survey contains short reports and statistical tables covering the four main areas of HILDA: households and family life, incomes and wealth, employment and unemployment/joblessness, and life satisfaction and well-being. Particular emphasis is given to the persistence of problems over the first four years of the HILDA survey (for example, the persistence of poverty over four years).

IBM® – Melbourne Institute ‘Innovation Index of Australian Industry’ The IBM® – Melbourne Institute ‘Innovation Index of Australian Industry’ tracks patterns in the rate of innovative activity among Australian businesses (including government trading enterprises but not the non-trading government sector such as education) since 1990. It includes the intensity of innovations in relation to goods and services, technical operations, and organisational, managerial and marketing functions. This report is available from the IBM website.

Melbourne Institute Working Paper Series The Melbourne Institute working papers are indicative of research projects undertaken within the Melbourne Institute. In 2007, 35 working papers were produced.

Melbourne Institute Reports The Melbourne Institute publishes ad hoc reports on important economic and social topics investigated by Melbourne Institute researchers.

Melbourne Institute News Melbourne Institute News was introduced in late 1999 to keep people abreast of various developments at the Melbourne Institute. Stories cover a range of items from the major research programs, the HILDA Survey, the MABEL Survey, conferences, forums and seminars. This newsletter is produced quarterly.

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Finance and Performance Indicators Income

Non-University Funds made up of Subscription Services Forums/Conferences Contract Research Grants Faculty of Economics and Commerce Allocation Other University Funds Total Income

2003

2004

2005

$7,116,242

$7,706,733

$8,506,488

$200,069 $318,221 $6,457,114 $140,838 $397,630 $616,448 $8,130,320

2006

2007

$9,051,614 $10,624,303

$127,383 $137,366 $134,806 $221,663 $144,063 $228,197 $264,478 $132,722 $7,133,888 $7,728,851 $7,931,174 $9,366,250 $301,399 $412,074 $721,156 $903,668 $1,115,240 $1,218,209 $1,178,320 $1,269,768 $794,409 $510,798 $754,128 $258,896 $9,616,382 $10,235,495 $10,984,062 $12,152,967

Performance Indicators

A. Staffing Melbourne Institute Staff (as at December) (total number) B. Research Performance Indexes 1. Research Income National Competitive Research Grants Other Public Research Grants

Industry and Other Research Funds

Total External Research Income 2. Publications Refereed Journal Articles: Weighted DEST points Total Publications: Weighted DEST points Refereed Journal Articles (count)

38 0%

41 8%

44 7%

$122,838 –28% $5,927,229 104% $1,320,251 –20% $7,370,318 56%

$301,399 145% $6,069,664 2% $1,335,670 1% $7,706,733 5%

$412,074 37% $6,535,050 8% $1,559,364 17% $8,506,488 10%

18.5 –16% 19 –36% 21 –22%

24.8 34% 30.5 61% 25 19%

32.9 33% 54.1 77% 45 80%

47 7%

47 0%

$721,156 $903,668 75% 25% $7,931,174 $8,063,052 21% 2% $399,284 $1,303,198 –74% 226% $9,051,614 $10,269,918 6% 13% 20.7 37% 38.7 –28% 29 –36%

28.3 35% 46.5 20% 45 55%

3. Higher Degree Students Research Higher Degree Students 5 5 5 5 5 (full-time equivalent) 11% 0% 0% 0% 0% Research Higher Degree Completions 2 0 2 1 2 C. Indicators with Respect to Business, Government and Public Policy Debates 1. Subscriptions to Melbourne Institute Products 268 246 277 305 278 (excluding Australian Economic Review) –50% –8% 13% 10% –9% 2. Value of Subscriptions and Sponsorship* $548,548 $566,288 $615,756 $781,587 $780,474 15% 3% 9% 27% 0% 3. References to the Melbourne Institute in the Media 1235 1196 2479 2483 2208 29% –3% 107% 0% –11% 4. References to the Melbourne Institute in Parliament 21 12 34 13 9 40% –43% 183% –62% –31% D. Financial Performance 1. Total Income $8,130,320 $9,616,382 $10,235,495 $10,984,062 $12,152,967 41% 18% 6% 7% 11% Note: * The value of sponsorships is counted in the above income table as contract research. 32 MELBOURNE INSTITUTE OF APPLIED ECONOMIC AND SOCIAL RESEARCH Annual Report 2007 and Outlook 2008