Paul Oslington

Factor market linkages in a global economy

This paper considers linkages between national labour markets in a global economy, extending the existing analyses to the empirically important case where factor price equalization does not hold. Removing the assumption of factor price equalization allows the divergent wage experience as well as unemployment experience of Europe and America to be explained. Europe`s minimum wage forces it out of the labour intensive industry, leaving it specialised in the skill intensive industry, and with a lower return to skill than America. Under these conditions the entry of labour intensive NICs into world markets pushes down American wages and alters its economic structure (which were unchanged under factor price equalization), and reduces European unemployment (which increased under factor price equalization).

A theological economics

Over the past century explicit discussion of theology has all but disappeared from economic discourse, while economics has been largely ignored by theologians. This paper argues that this separation is neither desirable nor possible, and calls for a theological economics. The argument is in two parts – a primary argument for the necessity and primacy of theology coming from the nature of orthodox Christian theology, and a secondary argument based on points of contact between economics and theology. Acceptance of the argument does not lead to a separatist “Christian” economics, but rather to discussion of theology implicit in contemporary economics and better relations between the two disciplines. Some existing work along these lines is briefly surveyed.

Dismissal Costs and Their Impact on Employment: Evidence from Australian Small and Medium Enterprises*

The influence of labour market regulation on employment is intensely debated across the OECD. In Australia, the focus is currently on the employment impact of recent changes to unfair dismissal provisions. There is surprisingly little research on the magnitude and structure of dismissal costs, and this paper presents new data from a major survey of small- and medium-sized Australian enterprises. Dismissal costs are compared for different types of separations, including redundancy, uncontested fires and complex fires. Using the data and a simple labour demand model, we estimate the direct employment impact of Australias changes to unfair dismissal protection. The impact is found to be modest.

The Contribution of Structural Shocks to Australian Unemployment

In this paper dynamic factor analysis techniques are used to decompose changes in unemployment into industry sectoral and common components. Sectoral shocks are important, but the dominant causes of variation in unemployment are common to all industries. This is particularly the case for low-frequency fluctuations in unemployment. The pattern of the estimated sectoral shocks reflects the well-documented shift of employment from agriculture and manufacturing to services, and we find no evidence that microeconomic reform has contributed greatly to unemployment. Copyright 2002 by The Economic Society of Australia.

Jacob Viner on Adam Smith: Development and reception of a theological reading

Abstract Jacob Viner was one of the most important interpreters of Adam Smiths work, particularly for his emphasis in a classic 1927 article on Smiths theological framework, his discussion of the relationship between the Theory of Moral Sentiments and the Wealth of Nations and dismantling of a popular view of Smith as a doctrinaire advocate of laissez-faire. What is less well known is that Viners theological reading of Smith developed over the next 40 years through intense study of eighteenth century natural theology, and some of his views changed. This article traces the development of Viners interpretation of Smith. It assesses the suggestion of D.D. Raphael that Smith moved away from a theological framework over time and that Viner repudiated his theological reading of Smith. I argue instead that Viners mature work broadened and strengthened the theological reading. Much of the literature on Smith and Viner wrongly assumes that naturalistic explanation and theological frameworks are mutually exclusive. This may be the dominant twentieth century view, but it was not so in the eighteenth century, as Viner well understood.

Trade, Wages and Unemployment in the Presence of Hiring and Firing Costs

This paper offers a new explanation of the recent Australian wage inequality and unemployment experience. Building on a standard international trade model, it is argued that trade affects wage inequality and unemployment through changes in the bargaining power of different groups of workers in the presence of hiring and firing costs. This allows previously puzzling aspects of the trends to be explained, including the inconsistency of the existing Stolper-Samuelson trade explanation with rising relative skilled wages at the same time as rising skilled labour intensity of production. Considering differences in labour market institutions, in particular hiring and firing costs and minimum wages, allows differences between the experiences of Australia, the USA and Europe to be explained.

Incentives in On-Line Education.

A major problem with on‐line education in contemporary universities is securing cooperation of academics. This paper argues that even if the benefits of on‐line learning are widely recognised, several incentive problems inhibit academic staff participation. These incentive problems include unverifiability of expertise in on‐line learning, the firm‐specific nature of investments in on‐line learning and the team nature of on‐line learning. Suggestions are made for remedying each of these problems by correcting the distorted incentives faced by academics and administrators.

The Future Hope in Adam Smith's System

Many of the contemporary global challenges we face involve economics, and theologians serving the contemporary church cannot escape an engagement with economics. This paper explores the place of future hope in economics through an examination of Adam Smith’s treatment of the topic. It begins by outlining the eighteenth-century theological background of Smith’s work, including Stoicism, the Newtonian tradition of natural theology, and the Calvinism of the Scottish Enlightenment moderates. It argues that the future hope plays an important (and neglected) role in Smith’s system. Future rewards and punishments are never invoked in a utilitarian manner; instead judgment and future life operate as a court of appeal where wrongs on this world are righted. The justice of this divine court of appeal is continuous with and reinforces the natural sense of justice we have in this present life. There can be no conflict between the two because, as Smith affirms, the same ‘great Director of nature’ is at work in both. For Smith the future state also operates as imaginative space where morality can be considered and renegotiated. Moving from the eighteenth to the twenty-first century, some comments are offered on hope and contemporary economics, particularly how they might be brought together again to more fruitfully engage with the global challenges we face.

Anglican Social Thought and the Shaping of Political Economy in Britain: Joseph Butler, Josiah Tucker, William Paley and Edmund Burke

Abstract The story of political economy is often told beginning with Adam Smith and his Scottish Enlightenment friends, then migrating to England where it took shape as a discipline in the early nineteenth century. This telling of the story neglects the role of eighteenth century Anglican natural theological thinking about the evolving market economy. We know that Joseph Butler’s writings on the relationship between self-interest and the common good were important for Hume and Smith and other political economists, as was the more explicitly economic work of Josiah Tucker. William Paley’s theological utilitarian framework and analysis of population and growth was the starting point for important nineteenth century political economists. Edmund Burke’s vigorous economic policy advocacy has its roots as much in the eighteenth century Anglicans as Smith, and Burke was an important conduit for the idea of a harmonious free market order into the nineteenth century and beyond.

Trade, Migration, and Inequality in a World Without Factor Price Equalization

The behavior of trading economies in the absence of factor price equalization is not well understood, although empirical evidence against factor price equalization is overwhelming. We map regions of diversification and specialization for competitive world economies with different factor endowment partitions. Goods and factor price responses as economies move within and across different regions of specialization are explored using a series of novel diagrams. The usefulness of endogenizing patterns of specialization is illustrated by considering the impact on inequality of migration flows (such as US–Mexico), the substitutability of trade and migration, and the impact of the entry of a large unskilled labor-intensive economy (such as China) on factor prices and factor flows.