Wages and Unemployment in Australia*

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Abstract
This paper reviews various models that may be used to analyze the inflation‐unemployment problem in Australia. The focus is on the unemployment problem, rather than on inflation, and on the role of wages, nominal and real, in affecting this problem. Models discussed include the Popular Keynesian, Phillips Curve, Fixed Coefficient and Neoclassical Models. The possibility of increasing returns is considered. Australian evidence bearing on the appropriateness of these models is discussed. The effect of demand expansion on the exchange rate and hence real wages is stressed. Some emphasis is placed on the concept of ‘union‐voluntary’ unemployment. At the end possible solutions to the unemployment problem are summarized.