Dutch disease, unemployment and structural change

Journal article

We find that Dutch disease effects on unemployment are small even in a commodity‐rich economy like Australia. Using an estimated open‐economy model with frictional unemployment, we quantify how business‐cycle shocks and structural changes shape aggregate unemployment. A permanent rise in commodity prices in the 2000s appreciated the real exchange rate and temporarily increased unemployment, but its effect was offset by a gradual, secular decline in the disutility of work in the non‐tradable sector, a key driver of long‐run structural change. Shifting preferences toward non‐tradables, together with non‐commodity shocks, account for most of the observed unemployment dynamics.

Authors: Kulish, M; Morley, J; Yamout, N; Zanetti, F

• Publication status: Published
• Peer review status: Peer reviewed
• Publisher: Wiley
• Journal: Economic Inquiry
• Publication date: 2026-04-05
• Acceptance date: 2026-03-16
• DOI: 10.1111/ecin.70059
• EISSN: 1465-7295
• ISSN: 0095-2583
• Language: English
• Keywords: structural transformation; structural change; business cycles; commodity prices; frictional unemployment; Dutch disease