Modelling the Labour Market in Fiji

Type Working Paper - Economics Department Reserve Bank of Fiji
Title Modelling the Labour Market in Fiji
Author(s)
Publication (Day/Month/Year) 2003
URL http://rbf.gov.fj/docs/wp2003-02.pdf
Abstract
This paper develops a simple model for Fiji’s labour demand and supply. The model is estimated over the period 1970 to 2000 as an unrestricted error correction model (ECM), allowing for lagged terms so as to capture dynamic adjustment effects. The results suggest that Fiji’s labour market adjusts very slowly to equilibrium levels in period (t) from a disequilibrium experienced in period (t-1). In the short run, labour force participation is significantly affected by changes in real wages and unemployment. However, in the long run, unemployment appears to be insignificant in determining labour force participation, while real wages and working population growth have a significant positive impact on labour force growth. On the labour demand side, changes in real GDP appear to be positive ly correlated to employment levels. Wages on the other hand, accounts for very little adjustment.

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