Insider Power as a Source of Hysteresis in Unemployment: Tests with Australian Data

This paper reports the results of an empirical investigation of hysteresis in the unemployment rate using Australian data for 1966(3)-1988(4). It is found that there is not hysteresis in the strict sense of the irrelevance of the natural unemployment rate although there is strong evidence of insider power in the wage-fixing process. There is no evidence that the Accord changed the extent of the influence of insider power on wage setting.