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Adjustment in Local Labour and Housing Markets

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Author Info

  • Arthur Grimes

    ()
    (Motu Economic and Public Policy Research)

  • David C. Maré

    ()
    (Motu Economic and Public Policy Research)

  • Melanie Morten

    ()
    (Motu Economic and Public Policy Research)

Abstract

This paper analyses local labour and hosuing market adjustment in New Zealand from 1989 to 2006. We use a VAR approach to examine the adjustment of employment, employment rate, participation rate, wages, and house prices in response to employment shocks. Migration is a major adjustment response at both a national and regional level. Nationally, a 1% positive employment shock leads to a long-run level of employment 1.3% higher, with half of the extra jobs filled by migrants. A 1% region-specific employment shock raises the long-run regional share of employment by 0.5 percentage points, due entirely to in-migration. House price responses differ at different spatial scales. Nationally, house prices are very responsive to employment shocks: a 1% employment shock raising long run house prices by 6% , as may be expected with an upward sloping housing supply curve. Paradoxically, this relationship does not hold at the regional level.

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Bibliographic Info

Paper provided by Motu Economic and Public Policy Research in its series Working Papers with number 07_10.

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Length: 48 pages
Date of creation: Aug 2007
Date of revision:
Handle: RePEc:mtu:wpaper:07_10

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Related research

Keywords: Regional Labour Market Adjustment; Internal Migration; House Prices; Vector Autoregression;

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References

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  1. Olivier Jean Blanchard & Lawrence F. Katz, 1992. "Regional Evolutions," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 23(1), pages 1-76.
  2. Benkwitz, Alexander & Lütkepohl, Helmut & Wolters, Jürgen, 1999. "Comparison of Bootstrap Confidence Intervals for Impulse Responses of German Monetary Systems," CEPR Discussion Papers 2208, C.E.P.R. Discussion Papers.
  3. Fredriksson, P., 1995. "The Dynamics of Regional Labour Markets and Active Labour Market Policy: Swedish Evidence," Papers 1995-20, Uppsala - Working Paper Series.
  4. Mark J. Holmes & Arthur Grimes, 2005. "Is there long-run convergence of regional house prices in the UK?," Working Papers 05_11, Motu Economic and Public Policy Research.
  5. Love, Inessa & Zicchino, Lea, 2002. "Financial development and dynamic investment behavior : evidence from panel vector autoregression," Policy Research Working Paper Series 2913, The World Bank.
  6. Paolo Mauro & Antonio Spilimbergo, 1998. "How Do the Skilled and the Unskilled Respond to Regional Shocks? the Case of Spain," IMF Working Papers 98/77, International Monetary Fund.
  7. repec:cup:macdyn:v:5:y:2001:i:1:p:81-100 is not listed on IDEAS
  8. Decressin, Jorg & Fatas, Antonio, 1995. "Regional labor market dynamics in Europe," European Economic Review, Elsevier, vol. 39(9), pages 1627-1655, December.
  9. David C. Maré & Jason Timmins, 2003. "Moving to Jobs?," Working Papers 03_07, Motu Economic and Public Policy Research.
  10. Arthur Grimes & Andrew Aitken, 2004. "What's the Beef with House Prices? Economic Shocks and Local Housing Markets," Working Papers 04_08, Motu Economic and Public Policy Research.
  11. Arthur Grimes & David C. Maré & Melanie Morten, 2006. "Defining Areas: Linking Geographic Data in New Zealand," Working Papers 06_07, Motu Economic and Public Policy Research.
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Citations

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Cited by:
  1. Rob Hodgson & Jacques Poot, 2011. "New Zealand Research on the Economic Impacts of Immigration 2005-2010: Synthesis and Research Agenda," CReAM Discussion Paper Series 1104, Centre for Research and Analysis of Migration (CReAM), Department of Economics, University College London.
  2. Steven Stillman & Malathi Velamuri, 2008. "The Long-Run Impact of New Zealand's Structural Reform on Local Communities," Working Papers 08_11, Motu Economic and Public Policy Research.
  3. Steven Stillman & David C. Maré, 2008. "Housing Markets and Migration: Evidence from New Zealand," Working Papers 08_06, Motu Economic and Public Policy Research.
  4. Julie Fry, 2014. "Migration and Macroeconomic Performance in New Zealand: Theory and Evidence," Treasury Working Paper Series 14/10, New Zealand Treasury.

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