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Modelling Regional Labour Market Adjustment in New Zealand

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Author Info
Wai Kin Choy
David C Mare
Peter Mawson () (Reserve Bank of New Zealand (Wai Kin Choy))

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Abstract

This paper adopts a vector autoregressive (VAR) approach to analyse the labour market adjustment mechanisms for 12 New Zealand regions over the period 1985 to 2001. It examines the effects of a region-specific shock to employment on itself, the unemployment rate, the participation rate, and the wage rate. The role of migration as a channel of regional labour market adjustment is also inferred. We find that adjustment occurs predominantly through inter-regional migration although the unemployment and participation rates also play a role. Wages, on the other hand, account for very little adjustment. The importance of inter-regional migration in New Zealand matches the results found in Sweden, but stands in contrast to the picture in many European countries. Migration appears to be a more dominant adjustment channel compared to the US and Australian cases. However, this has to be placed into context – New Zealand regions are much smaller in terms of population size.

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File URL: http://www.treasury.govt.nz/publications/research-policy/wp/2002/02-01/twp02-01.pdf
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Publisher Info
Paper provided by New Zealand Treasury in its series Treasury Working Paper Series with number 02/01.

Download reference. The following formats are available: HTML, plain text, BibTeX, RIS (EndNote), ReDIF
Length: 81 pages
Date of creation: Mar 2002
Date of revision:
Handle: RePEc:nzt:nztwps:02/01

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Postal: New Zealand Treasury, PO Box 3724, Wellington, New Zealand
Phone: +64-4-472 2733
Fax: +64-4-473 0982
Web page: http://www.treasury.govt.nz
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Related research
Keywords: Regional labour market adjustment Internal migration

Other versions of this item:

Find related papers by JEL classification:
R23 - Urban, Rural, and Regional Economics - - Household Analysis - - - Regional Migration; Regional Labor Markets; Population
J61 - Labor and Demographic Economics - - Mobility, Unemployment, and Vacancies - - - Geographic Labor Mobility; Immigrant Workers

This paper has been announced in the following NEP Reports:

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Hayden Glass & Wai Kin Choy, 2001. "Brain Drain or Brain Exchange?," Treasury Working Paper Series 01/22, New Zealand Treasury. [Downloadable!]
  2. Runkle, David E, 1987. "Vector Autoregressions and Reality," Journal of Business & Economic Statistics, American Statistical Association, vol. 5(4), pages 437-42, October.
  3. James MacKinnon, 1990. "Critical Values for Cointegration Tests," University of California at San Diego, Economics Working Paper Series 90-4, Department of Economics, UC San Diego. [Downloadable!]
  4. Papps, Kerry L. & Newell, James O., 2002. "Identifying Functional Labour Market Areas in New Zealand: A Reconnaissance Study Using Travel-to-Work Data," IZA Discussion Papers 443, Institute for the Study of Labor (IZA). [Downloadable!]
  5. David E. Runkle, 1987. "Vector autoregressions and reality," Staff Report 107, Federal Reserve Bank of Minneapolis. [Downloadable!]
  6. Paolo Mauro & Eswar Prasad & Antonio Spilimbergo, 1999. "Perspectives on Regional Unemployment in Europe," IMF Occasional Papers 177, International Monetary Fund.
  7. Olivier Jean Blanchard & Lawrence F. Katz, 1992. "Regional Evolutions," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 23(1992-1), pages 1-76. [Downloadable!]
  8. Decressin, Jörg & Fatás, Antonio, 1994. "Regional Labour Market Dynamics in Europe," CEPR Discussion Papers 1085, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
    Other versions:
  9. Guy Debelle & James Vickery, 1998. "Labour Market Adjustment: Evidence on Interstate Labour Mobility," RBA Research Discussion Papers rdp9801, Reserve Bank of Australia. [Downloadable!]
  10. David C Maré & Wai Kin Choy, 2001. "Regional Labour Market Adjustment and the Movements of People: A Review," Treasury Working Paper Series 01/08, New Zealand Treasury. [Downloadable!]
  11. Fredriksson, Peter, 1999. "The Dynamics of Regional Labor Markets and Active Labor Market Policy: Swedish Evidence," Oxford Economic Papers, Oxford University Press, vol. 51(4), pages 623-48, October.
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  12. Timothy J. Bartik, 2003. "Local Economic Development Policies," Staff Working Papers 03-91, W.E. Upjohn Institute for Employment Research. [Downloadable!] (restricted)
  13. Sharon McCaw & C John McDermott, 2000. "How New Zealand adjusts to macroeconomic shocks: implications for joining a currency area," Reserve Bank of New Zealand Bulletin, Reserve Bank of New Zealand, vol. 63, March. [Downloadable!]
Full references

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. David C. Maré & Jason Timmins, 2003. "Moving to Jobs?," Working Papers 03_07, Motu Economic and Public Policy Research. [Downloadable!]
    Other versions:
  2. Suzi Kerr & Andrew Aitken & Arthur Grimes, 2004. "Land Taxes and Revenue Needs as Communities Grow and," Public Economics 0403001, EconWPA. [Downloadable!]
  3. Jacques Poot & Bill Cochrane & Sandra Baxendine, 2005. "Description and Spatial Analysis of Employment Change in New Zealand Regions 1986-2001," Population Studies Centre Discussion Papers dp-57, University of Waikato, Population Studies Centre. [Downloadable!]
  4. David C. Maré & Michelle Poland, 2005. "Defining Geographic Communities," Working Papers 05_09, Motu Economic and Public Policy Research. [Downloadable!]
    Other versions:
  5. Suzi Kerr & Andrew Aitken & Arthur Grimes, 2004. "Land Taxes and Revenue Needs as Communities Grow and Decline: Evidence from New Zealand," Working Papers 04_01, Motu Economic and Public Policy Research. [Downloadable!]
    Other versions:
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