What discourages Indigenous
discouraged workers?
Presented by Boyd Hunter and Matthew Gray to
CAEPR seminar Series, 8th June 2011
Motivation
• “Our economy can’t afford to waste a single pair of
capable hands” Wayne Swan (2011)
• Gray and Hunter (2001) showed that indigenous
discouraged workers or marginally attached,
more common than in the rest of the population
– We focus on a broad definition of marginal attachment because
more meaningful for disadvantaged & to facilitate comparability
with Australian estimates
• Labour market transitions different for those
marginally attached to work force (Gray Heath &
Hunter 2005)
2
Introduction to the theory
• Early literature was largely empirical & related to
the aggregate relationship between the labour
force participation & unemployment rate
• More recent search theoretic framework has been
use to relate individual optimising labour supply
behaviour to the macro-economic cycle
– Discouraged workers push out by low emp. probability
– Added workers pulled into LF by income pressures
• Breadwinner model of labour supply is outdated
– need interaction of supply/demand & household
characteristics
3
Relaxing ABS/ILO definitions
• ABS Unemployed: not employed, want to
work, actively searching for work & available
to start
• Discouraged worker if not in the labour force,
want a job, available to start work but given
up actively searching for work because they
believe they cannot find work
• Marginally attached: if not in labour force &
want to work (consistent with ILO definition)
4
Indigenous data: 2008 NATSISS
• Conducted from August 2008 to April
2009
• 13,300 Indigenous respondents in private
dwellings
– 5,500 of these respondents aged less than 15
– Individuals randomly selected for interview from preliminary
demographic inquiries. Up to two Indigenous persons aged 15 years
and over, and up to two Indigenous children aged 0-14 years were
randomly selected (Proxy interviews were conducted for children)
– Population benchmarks based on ERP data from 2006 Census
– Note it is an omnibus survey that does not focus on any particular issue
5
Australian population data: MultiPurpose Household Survey (MPHS)
• Conducted from July 2008 to June 2009 in both
urban and rural areas in all states and territories,
but excluded very remote parts of Australia
• Marginal attachment identified for
respondents age 18+ years who were part of
the “main sample”
• 13,035 respondents aged 15+ years in private
dwellings in the “main sample”
– MPHS is an omnibus survey conducted each month as a supplement
to the Labour Force Survey
6
Reasons not looking for work, marginally attached Indigenous males & females, 2008 (%)
Non-rem.
Males
Non-rem.
Females
Remote
Males
Remote
Females
Lacks schooling, training, skills or experience
4
3
5
6
No jobs in locality or in line of work
4
3
20
11
No jobs with suitable hours
0
3
0
3
No jobs at all
3
2
14
7
Has a job to go to
1
2
2
1
Other employment reasons
2
2
3
1
Own short term illness or injury
11
3
10
1
Own LT health condition or disability
44
7
15
10
Pregnancy
0
5
0
3
Studying or returning to studies
12
10
2
3
Welfare payments or pension affected
5
3
2
2
Moved house or on holidays
2
2
6
1
Ill health of other family member
5
56
4
46
Childcare
5
7
4
4
Other family considerations
6
18
4
14
8
153
10
476
14
81
7
203
Other reason
Number of respondents
7
Reasons not looking for work, want to work and available to start
work, Australian population 18-64 (% marginally attached)
Females
Males
Lacks necessary training/qualifications/experience/difficulties
with language or ethnic background
6
4
No jobs with suitable conditions/arrangements
6
8
No jobs or vacancies in locality/line of work/at all
6
10
Considered too old by employers
4
2
No need/satisfied with current arrangements/retired (for now)
7
9
Permanently unable to work
4
14
Unable to work because of disability/believes disability
discourages employers
7
8
Studying/returning to studies
18
20
Caring for children
32
7
Home duties
9
1
Other
26
30
8
Cross-country female discouraged workerpopulation trends, OECD
1
Australia
European Union 15
United States
Canada
New Zealand
0.9
0.8
0.7
0.6
0.5
0.4
0.3
0.2
0.1
0
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
9
Cross-country male discouraged workerpopulation trends, OECD
1
0.9
Australia
European Union 15
United States
Canada
New Zealand
0.8
0.7
0.6
0.5
0.4
0.3
0.2
0.1
0
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
10
Marginal attachment more useful definition
• Discouraged worker phenomenon focuses
too narrowly on the demand-side reasons
for not looking when people can in reality
have mixed motives (even if only nominate
1 reason)
• Marginal attached workers demonstrated to
have a different labour force transitions from
other NILF (Gray Heath and Hunter 2005)
– Not ABS definition but only focus on ‘want to
work’ to contrast to other NILF
11
Trends in Female Labour Force Status by
Indigenous status, 1994-2008
70.0
Percentage of adult population
60.0
Indigenous Female 1994
Australian Female 1994
50.0
Indigenous Female 2008
Australian Female 2008
40.0
30.0
20.0
10.0
0.0
Employed
Unemployed
Marginally attached
Other NILF
12
Trends in Male Labour Force Status by
Indigenous status, 1994-2008
80.0
Percentage of adult population
70.0
Indigenous Male 1994
Australian Male 1994
60.0
Indigenous Male 2008
Australian Male 2008
50.0
40.0
30.0
20.0
10.0
0.0
Employed
Unemployed
Marginally attached
Other NILF
13
Modeling of marginal attachment versus other
labour force states
• Multinomial logit model used to describe the
underlying determinants of indigenous male &
females aged 18-64 compared to all Australians
– Parsimonious specification because of comparability
constraints for MPHS (age, detailed geography,
education, household size, student status)
– Expanded specification for Indigenous-specific
variables (NB: other factors unchanged)
– Treatment of CDEP (exclude or assume equals
employment)
14
Marginal effects education attainment, females (%)
Marginally
Unemployed attached
Employed
Other
NILF
Indigenous females
Degree plus
36
-5
-13
-19
Other qual
23
1
-6
-18
Year 12
34
-5
-12
-18
Year 10 or 11
19
-1
-5
-13
Base probabilities
44
13
17
26
Degree plus
27
-2
-8
-17
Other qual
22
-1
-6
-15
Year 12
18
-2
-5
-11
Year 10 or 11
12
-0.4
-3
-8
Base probabilities
74
3
8
15
All Australian females
15
Marginal effects education attainment, males (%)
Employed
Unemployed
Marginally
attached
Other
NILF
Indigenous males
Degree plus
24
-13
-2
-9
Other qual
17
-4
-4
-9
Year 12
25
-9
-7
-9
Year 10 or 11
15
-3
-4
-8
Base probabilities
63
18
8
11
9
-2
-3
-4
10
-1
-3
-5
Year 12
7
-1
-2
-4
Year 10 or 11
4
0.2
-1
-3
90
2
3
4
All Australian males
Degree plus
Other qual
Base probabilities
16
Female labour force status probabilities by
family status
90.0%
Employed
Unemployed
Marginally attached
Other NILF
80.0%
70.0%
60.0%
50.0%
40.0%
30.0%
20.0%
10.0%
0.0%
Single
Couple
Couple
with kids
Australian population
Single
mother
Single
Couple
Couple
with kids
Single
mother
Indigenous
17
Marginal effects other factors (%)
Employed
Unemployed
Marginally
attached
Other
NILF
Indigenous females
Full-time student
Household size
5
1
3
-9
-3
1
2
1
-44
6
17
21
-1
0.0
0.0
1
-15
-6
7
14
-3
1
1
1
-66
2
18
45
-1
0.0
0.3
0.5
All Australian females
Full-time student
Household size
Indigenous males
Full-time student
Household size
All Australian males
Full-time student
Household size
18
Marginal effects factors available for indigenous only (%)
Female
Employed
Unemployed
Marginally
attached
Other
NILF
Mixed household
18
-5
-5
-8
Severe disability
-28
-1
4
25
Arrested last 5 years
-23
9
11
3
Hunting & gathering
2
4
-3
-3
-5
5
2
-2
5
1
1
-7
Mixed household
18
-12
-4
-2
Severe disability
-45
-8
11
42
Arrested last 5 years
-18
11
4
3
Hunting & gathering
6
1
-2
-4
-8
6
1
1
5
-3
-2
-1
Lives in homeland
Neig'hood has probs
Male
Lives in homeland
Neig'hood has probs
19
Any discrimination in the previous 12
months by labour force status, 2008
Any experience of discrimination in the last 12 months?
0.600
0.500
ALL MALES
ALL FEMALES
0.400
0.300
0.200
0.100
0.000
Non-CDEP
CDEP
Unemp
Marginally
Attached
Other NILF
20
Discussion (1)
• Indigenous Australians have much higher rates of
marginal attachment than the Australian average
– More than double for females and nearly double for males
• Bigger increases in employment between 1994
and 2008 for Indigenous female and males than
the Australian average
• Bigger drop in rate of marginal attachment for the
Indigenous than the Australian average
21
Discussion (2)
• Education is strongly related to labour force
status, but effect is stronger for the Indigenous
population than the Australian average
• Family factors
– Men: not an important determinant of marginal attachment (or
employment) for men (Indigenous and male Australian population)
– Women: Family factors very important determinant of marginal
attachment and LFS more broadly. In broad terms, pattern of
determinants of LFS similar for Indigenous women as for the female
Australian population
– Indigenous single mothers have much higher rates of marginal attachment
than other groups
22
Discussion (3)
• Factors strongly related to marginal attachment
for Indigenous population are:
– Living in a “mixed household” – decreases likelihood of marginal
attachment and increases likelihood of being employed
– Severe disability – increases likelihood of marginal attachment
– Arrested in last 5-years – increases chance of being marginally attached
– Having participated in hunting and gathering or living in homelands is only
weakly related to the likelihood of being marginally attached
• Results points to the importance of macroeconomy in creating jobs (and possibly of social
security policy settings that encourage paid
employment)
23