Unemployment Rate Dispersion in Melbourne: The 'Regional' Dimension

In this paper we examine unemployment rate dispersion across the (statistical) regions in theMelbourne metropolitan area. We find that the level of dispersion is positively correlated withthe unemployment rate in all the regions taken together and that the ‘elasticity’ of dispersionwith respect to the unemployment rate is unity, with the result that there is a tendency for thelevel of dispersion relative to the average unemployment rate to remain stationary over oursample period. We discuss the implications of this and show that the unemployment ratedifferences are persistent in the sense that the same areas exhibit relatively high (or low)unemployment rates over the whole of our sample period. We also estimate equilibrium ratesof unemployment for the different regions in Melbourne and conjecture possible explanationsfor the differences in the level and in the persistence of the equilibrium rates.