Alternative Measures of Labour Underutilisation: Gender, education and unemployment by

Labour underutilisation is typically measured by dividing the number of employed workers by the total labour force. This yields the “unemployment rate, ” which is com-monly used for modelling, policy and public debate purposes. Clearly this measure ignores the fact that workers are heterogeneous, and hence is likely to overstate the degree to which a society’s productive labour resources are underutilised; highly skilled workers are less likely to be unemployed, and these workers are generally more produc-tive. This paper uses census data for the period 1981 to 2001 for Australia to calculate alternative measures of labour underutilisation. Results are reported for males, females and all persons. Deviations from the conventional measure can be substantial