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Cyclical Labour Market Adjustment in New Zealand: The Response of Firms to the Global Financial Crisis and its Implications for Workers

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Author Info

  • Richard Fabling

    ()
    (Motu Economic and Public Policy Research)

  • David C. Maré

    ()
    (Motu Economic and Public Policy Research)

Abstract

This paper examines the dynamics of employment adjustment in New Zealand, focusing on the response of firms to the 2008/09 Global Financial Crisis. We use data from Statistics New Zealand’s prototype Longitudinal Business Database (LBD) to examine firms’ employment responses to output shocks before and after the crisis, and to investigate variations in job and worker flows. We discuss the resilience of the NZ labour market to economic shocks, and the possible role of labour market policy settings. Finally, we discuss preliminary findings on the differential impact of labour market adjustment on workers – by earnings level, age, gender, and tenure – and outline potential further work along these lines. Our analysis of firm microdata highlights three key features of New Zealand labour market adjustment to the 2008/09 crisis. First, there was considerable heterogeneity across firms, both before and after the crisis, in the size of output shocks that firms faced, the amount of employment adjustment in response to any given output shock, and in the size of worker flows given the firm’s employment adjustment. Second, the crisis not only moved the distribution of output shocks faced by firms, but also altered the relationship between output shocks and changes in job and worker flows and employment. Third, the impact of the observed firm-level dynamics had an uneven impact on workers, with greater employment losses for low wage workers, young workers, and workers with low job tenure.

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Bibliographic Info

Paper provided by Motu Economic and Public Policy Research in its series Working Papers with number 12_04.

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Length: 61 pages
Date of creation: Apr 2012
Date of revision:
Handle: RePEc:mtu:wpaper:12_04

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Keywords: Global Financial Crisis; labour market adjustment; output shock; unemployment; job flows; worker flows;

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References

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  16. Richard Fabling, 2011. "Keeping it Together: Tracking Firms on New Zealand’s Longitudinal Business Database," Working Papers 11_01, Motu Economic and Public Policy Research.
  17. Andrea Bassanini & Andrea Garnero & Pascal Marianna & Sébastien Martin, 2010. "Institutional Determinants of Worker Flows: A Cross-Country/Cross-Industry Approach," OECD Social, Employment and Migration Working Papers 107, OECD Publishing.
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Citations

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Cited by:
  1. Maré, David C. & Fabling, Richard, 2013. "The Incidence and Persistence of Cyclical Job Loss in New Zealand," IZA Discussion Papers 7745, Institute for the Study of Labor (IZA).
  2. Richard Fabling & Maré, David C, 2013. "Firm-level Hiring Difficulties: Persistence, Business Cycle and Local Labour Market Influences," Working Papers 13_06, Motu Economic and Public Policy Research.
  3. Jeff Borland, 2014. "Recent Unemployment Experience in New Zealand," Treasury Working Paper Series 14/01, New Zealand Treasury.
  4. Gail Pacheco & Jessica Dye, 2013. "Estimating the Cost of Youth Disengagement in New Zealand," Working Papers 2013-04, Auckland University of Technology, Department of Economics.
  5. Sylvia Dixon & Maré, David C, 2013. "The Costs of Involuntary Job Loss: Impacts on Workers’ Employment and Earnings," Working Papers 13_03, Motu Economic and Public Policy Research.

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