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Contributions of Employment Change to Annual Wage Growth in New Zealand

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  • Dean R Hyslop
  • Amy Rice

Abstract

We analyse trends in average wage growth in New Zealand from 1997 to 2015, focusing on the contributions of within‐group wage growth and employment compositional changes, and whether there have been secular or cyclical changes in these contributions. Real wage growth was mildly pro‐cyclical over the period, and has been weaker during the recovery from the global financial crisis. We estimate that within‐group wage growth dominated aggregate wage growth, and compositional changes provided only trivial contributions. Furthermore, within‐group wage growth is primarily from constant composition wage growth, contributing on average 0.9 per cent to annual wage growth, while improvements in observable human capital characteristics of workers contributed 0.4 per cent on average.

Suggested Citation

  • Dean R Hyslop & Amy Rice, 2019. "Contributions of Employment Change to Annual Wage Growth in New Zealand," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 52(1), pages 107-115, March.
    • Handle: RePEc:bla:ausecr:v:52:y:2019:i:1:p:107-115
    DOI: 10.1111/1467-8462.12310
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    References listed on IDEAS

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    1. Mary C. Daly & Bart Hobijn, 2017. "Composition and Aggregate Real Wage Growth," American Economic Review, American Economic Association, vol. 107(5), pages 349-352, May.
    2. Joyce K. Hahn & Henry R. Hyatt & Hubert P. Janicki & Stephen R. Tibbets, 2017. "Job-to-Job Flows and Earnings Growth," American Economic Review, American Economic Association, vol. 107(5), pages 358-363, May.
    3. Dean Hyslop & Suresh Yahanpath, 2006. "Income Growth and Earnings Variations in New Zealand, 1998-2004," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 39(3), pages 293-311, September.
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    1. Guyonne Kalb & Jordy Meekes, 2021. "Wage Growth Distribution and Changes over Time: 2001–2018," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 54(1), pages 76-93, March.
    2. Guyonne Kalb & Jordy Meekes, 2019. "Wage Growth Distribution and Decline among Individuals: 2001-2017," RBA Annual Conference Papers acp2019-03, Reserve Bank of Australia, revised Jul 2019.

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