Analysis of Unemployment and Tobacco Reforms in Australia

This essay critically analyzes the rate of cigarette smoking in Australia, the causes of different types of unemployment, and the policies enacted by the Australian government to reduce smoking. It also evaluates the factors driving 15-24-year-olds to work part-time or casual rather than full-time and describes the rate of youth unemployment and underemployment in Australia. The essay concludes by comparing and contrasting the rates of youth unemployment in Australia with the world average.

Task description:
Essay 1:
Davidson and De Silva (2018) have written a recent article entitled as “Did Recent Tobacco
Reform change the Cigarette market” (pp. 55-74).
Based on the above you are required to critically answer, not least, the following questions:
1. Compare and contrast the rate of cigarette smoking in Australia with your home country
and the world average rate.
In the US, the prevalence of cigarette smoking is 16.8% compared to the world prevalence rate
of 20% and Australia at 12%. This shows that more people smoke cigarettes in the world and the
US on average compared to Australia (WorldBank data).
2. Draw and label fully a supply and demand curve diagram to explain how an excise tax
on cigarettes affects:
Elastic demand
Supply
Inelastic demand
Excise tax
P2
P1
Q2 Q1Q3

In the case the demand is elastic, the increase in price due to the excise tax will cause a more
than proportionate decrease in the quantity demanded from Q1 to Q3. The government revenue
will therefore be (P2-P1) *Q3
In case the demand is inelastic, the increase in price due to the excise tax will cause a less than
proportionate decrease in the quantity demanded hence the move from Q1 to Q2. The
government revenues will therefore be (P2-P1) *Q2
3. Explain the id******** cost ********s benefit when making decisions. Use this idea to
analyze as to why: the government wishes to reduce the rate of smoking; and - a smoker as
they age should quit smoking.
Each year,
smoking kills an
estimated
15,000
Australians and
costs Australia

$31.5 billion in
social
(including
health) and
economic costs.
Each year,
smoking kills an
estimated
15,000
Australians and

costs Australia
$31.5 billion in
social
(including
health) and
economic costs.According to the article, cigarette smoking has accounted for over 150000 deaths annually and
has increased the economic costs of healthcare to the government. A decrease in smoking rates is
bound to lead to cost savings in these two areas. There is evidence to suggest the higher impact
of tobacco smoking in older individuals compared to when they are young and therefore an
individual should gain more if they quit smoking at an older age (Davidson & de Silva, 2018).

Each year,
smoking kills an
estimated
15,000
Australians and
costs Australia
$31.5 billion in
social

(including
health) and
economic costs.
4. Describe and evaluate the various policies over the years (other than a tax on smoking)
that the Australian and State governments have enacted in order to reduce smoking.
One of the policies includes plain packaging where the state regulated the packaging of cigarettes
to make them less attractive for individuals to purchase it. The other policy was the introduction
of excise tax increases. From the article, pain packaging had no considerable impact in the
change of smoking rates in the country. Also, the increase in excise tax had significantly less
impact. Further the article cites that individuals had policy resistance to policies affecting their
consumption which reduced the efficacy of regulation policies (Davidson & de Silva, 2018).
5. Finally, in this essay you must answer the implications of the topic by answering the
following questions based on the above article:
(i) What does this article argue about the effectiveness of plain packaging of
cigarettes in reducing smoking rates? And, (ii) what ramifications
and implications are drawn by this research?
According to the article, there is little or a net negative effect of introduction of plain packaging
as a policy regulation on the smoking of cigarettes. This is because it only leads to a loss of

product differentiation on the supply side forcing the suppliers to compete on price which further
increases prices in the market. This is because the plain packaging does not quite affect the
nature of the product. It also contributes to the levels of policy resistance among consumers who
anticipate policy regulations meant to deter them from the consumption of tobacco (Davidson &
de Silva, 2018)..
Essay 2:
1. What are the causes of the following types of unemployment:
- Structural
The article hypothesizes that a probable cause for structuralt could be the mismatch between the
graduate skills and current skills demanded.
- Cyclical
According to the article, cyclical unemployment is created by the demand and supply cycles of
certain industries for example hospitality and tourism where the amount of workers needed will
be dependent on the demand for the service provided.
- Frictional
According to the article, frictional unemployment is caused by a heightened sensitivity of
younger workers to demand conditions which may reflect a “last in, first out practice” making

employers reluctant to hire or retain younger workers especially when there is cyclical
weaknesses since they tend to have less experience and lower skills.
- Hidden
According to the article, there are individuals who are not interested in finding work yet the
unemployment statistics only account for individuals who are unemployed and actively looking
for work. This shows that a significant portion of the population could be misrepresented in the
unemployment statistics.
- Underemployment
According to the article, underemployment occurs when individuals are willing to work for more
hours but are not able to find the type of work that allows them so.
2. Using information from the captioned article as your guide, use Supply and Demand
curves and analyse:
Demand
Supply

One factor contributing to the decline in labor supply of 15-24 year old’s is the ageing of the
population. As the population grows older, the labor supply provided by the age group of 15-24
year old’s declines. Another factor is the decline in the participation rate of younger workers.
This means that younger workers may be less interested to participate in work compared to the
work available to them this may be due to studies which may require full time participation. A
factor that may increase labor supply is probable the time available to the individuals to work.
Another factor that may increase labor supply is migration where individuals from other
countries enter the country and are legible to participate in the workforce (Davies and ANTA,
2001).
In the case of labor demand, one factor that may lead to an increase in demand for 15-24 year-
old workers is increase in the availability of part time employment and a decline in full time
employment. This structural change has increased the demand for younger people working part
time. Another structural factor is the structure of the economy. For example, as the economy
becomes more service oriented, there has been an increased demand for workers in the service
industries such as tourism and hospitality. Another factor is technological change where the
decline in demand for routine jobs and the automation of entry level or lower skilled jobs limits
the options for younger people to find full time work.

3. Describe and evaluate the factors that are driving the fact that 15-24-year-old work part-
time or casual rather than full time.
One of the reasons influencing the level of part time work among individuals who are 15-24
years of age is that most of them are still in school and are therefore unable to work in a fulltime
capacity. The other reason is because there are structural or cyclical issues in the industry they
are seeking work, they are not able to successfully find fulltime work. Another reason is some of
the young individuals may prefer working part time since they would like to participate in order
activities as well. Also, the individual may be engaged in multiple job options which may require
them to work part time. Another influencing factor is that the individual may be caring for
children and therefore working part time creates a conducive schedule (Davies and ANTA,
2001).
4. Describe the rate of youth unemployment and underemployment in Australia. Provide
reasons for this rate.
The rate of youth unemployment in Australia is 12½ percent while the underemployment rate is
nearly 14 percent. The youth unemployment in Australia describes individuals who are eligible
for work and are looking for work but cannot find work while the underemployment rate
describes individuals who are looking to work more hours but cannot find more work. It is clear
that the underemployment rate in the market is higher than unemployment. This is contributed by
the increase in part time employment compared to full time employment which makes workers
employed for lesser hours than they would like. This shows that while the economy is capable of
employing more people, it is increasing employment in a part time capacity (Davies and ANTA,
2001).

.
5. Compare and contrast rates of youth unemployment in Australia with your home
country and the world average. Analyse the causal factors behind these differences
or similarities.
In America, the youth unemployment rate is 9%. This is a lower rate than that of Australia. One
of the reasons why this may be so is the difference in the ability of the economy to absorb more
youth in the labor market. Further, there might be higher levels of youth engagement in labor
compared to that in Australia.
References
Davidson, S., & de Silva, A. (2018). Did Recent Tobacco Reforms Change the Cigarette
Market?. Economic Papers: A journal of applied economics and policy, 37(1), 55-74.
Davies, M., Teese, R., O'Brien, K., & Australian National Training Authority (ANTA);
University of Melbourne. Centre for Post-compulsory Education & Training (CPET); Royal
Melbourne Institute of Technology (RMIT). (2001). Labour market outcomes for young people.
World Bank data retrieved from https://data.worldbank.org/