publication . Preprint . 2005

The Displacement Effect of Labour-Market Programs: Estimates from the MONASH Model

Peter B. Dixon; Maureen T. Rimmer;
Open Access
  • Published: 01 Jul 2005
A key question concerning labour-market programs is the extent to which they generate jobs for their target group at the expense of others. This effect is measured by displacement percentages. We describe a version of the MONASH model designed to quantify the effects of labour-market programs. Our simulation results suggests that: (1) labour-market programs can generate significant long-run increases in employment; (2) displacement percentages depend on how a labour-market program affects the income trade-off faced by target and non-target groups between work and non-work; and (3) displacement percentages are larger in the short run than in the long run.
free text keywords: labour-market programs, displacement percentage, CGE modelling, jel:C68, jel:J23, jel:J63

Dixon P.B. and M.T. Rimmer (2002), Dynamic General Equilibrium Modelling for Forecasting and Policy: a Practical Guide and Documentation of MONASH, Contributions to Economic Analysis 256, North-Holland Publishing Company, pp.xiv+338.

Dixon P.B. and M.T. Rimmer (2003), “A new specification of labour supply in the MONASH model with an illustrative application”, The Australian Economic Review, Vol. 36(1), March, pp. 22-40.

Kalb, G. (1997) An Australian model for labour supply and welfare participation in two-adult households, Ph. D. thesis, Monash University, October. [OpenAIRE]

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