THE NON-COINTEGRA TION OF QUEENSLAND REGIONAL EMPLOYMENT AND SOME CONSIDERATIONS FOR REGIONAL POLICY AND MODELLING

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THE NON-COINTEGRA TION OF QUEENSLAND REGIONAL EMPLOYMENT AND SOME CONSIDERATIONS FOR REGIONAL POLICY AND MODELLING

This paper attempts to find evidence of cointegration between regional and state employment series. The tests are conducted on Total and Manufacturing employment for Queensland and its labour force regions. A simple neoclassical model incorporating an equilibrium theory of cointegration is presented and the implications of this model are outlined. Contrary to the conclusions of the model. the tests presented here suggest that disturbances to shares are cumulative and permanent. This finding has implications for both the appropriate theoretical structure of regional models and for the efficacy of regional development policy. In particular. the results suggest that regional policy can have a permanent effect on the economic base of regional economies.