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QUALITY OF ESTIMATES
The new sample, while smaller, will still be representative, with selections made in all parts of Australia. There will be increased volatility in the estimates, particularly the original and seasonally adjusted estimates, but this volatility will be random. Given the increased volatility in the original and seasonally adjusted estimates, the ABS would continue to encourage users to focus on trend estimates as the increased volatility seen in the original and seasonally adjusted estimates will be dampened through the 'trending' process.
The most common way to quantify the volatility is to examine the relative standard errors (RSEs). Table 2 below shows the target RSEs following the 2006 sample design and introduction of composite estimation and the target RSEs for the sample from July 2008.
Overall, the RSEs for estimates of employment and unemployment at the national, state and territory level are expected to be approximately 15% higher than those expected from the 2006 sample design. The impact of the increased RSEs is best demonstrated by consideration of the confidence intervals surrounding the respective estimates. By way of example, say the estimate for employment is 10,000,000. Under the 2006 design, there would be 19 chances in 20 that the real value falls within the range 9,932,600 to 10,067,400. With the reduction in sample from July 2008 that range will increase to 9,922,800 to 10,077,200. Similarly for unemployment, if the estimate is 500,000 then under the 2006 design, there would be 19 chances in 20 that the real value falls within the range 474,000 to 526,000. With the reduction in sample that range will increase to 470,200 to 529,800.
Key monthly estimates from the LFS are published in Labour Force, Australia (cat. no. 6202.0). As well, there are a range of other products presenting detailed estimates from the LFS, which are available at the ABS website, www.abs.gov.au.
The sample reduction will also increase the standard error on the detailed estimates in these products by approximately 15%. Some of the estimates in these products, such as detailed industry estimates for small states and territories, have always had high standard errors and the sample reduction will increase this number.
To assist users in understanding the quality of the estimates published, the ABS will be producing a new standard error model for the LFS. This model will be used to populate the standard error tables in this publication and to annotate those estimates in our products with an RSE of 25% or higher. Estimates with an RSE of 25% or higher should be used with caution. This new model will also be incorporated into the spreadsheet Labour Force Survey Standard Errors, Datacube (cat. no. 6298.0.55.001) to allow users to calculate the standard error for any LFS estimate.
In addition to impacting on the LFS, the sample reduction will also affect the supplementary surveys which are conducted on part of the LFS sample and cover a range of different topics. Due to the infrequent nature of topics in the supplementary surveys, they do not benefit from the efficiency gains associated with composite estimation. As a result the sample reduction associated with the 2006 design is resulting in increased standard errors for these estimates. The further sample reduction to be introduced in July 2008 will increase the standard errors further. In combination, the sample reductions are expected to increase the standard error for estimates from supplementary topics by approximately 22% relative to the 2001 design. The level of disaggregation of estimates possible from these topics will be assessed as each topic is prepared for release. However, it is likely that the level of disaggregation will need to be reduced, especially for topics which relate to small sub populations.
The ABS also conducts a Multi Purpose Household Survey on part of the LFS sample each year. The impact of the sample reduction on the MPHS will not be as large as for the LFS or the supplementary topics as the MPHS sample size will be kept approximately the same after July 2008. Under the 2001 sample design, the MPHS sampled one-third of those dwellings in the LFS for the last month, which achieved a sample of 13,500 dwellings per year. Following the sample reduction, the proposal is to increase the proportion of dwellings sampled to 50% of those in the LFS for the last month. This proportion is expected to achieve a MPHS sample size of 13,000 dwellings per year.
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