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Estimation of wage equations for New Zealand

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  • Joseph Mercante
  • Penny Mok

    ()
    (The Treasury)

Abstract

This paper estimates wage equations for New Zealand based on pooled data from the Household Economic Survey (HES) from 2006/07 to 2010/11. Equations are estimated separately for couple men and women, single men and women and sole parents. The results are compared to previous New Zealand estimates using the HES from 1991 to 2001. We estimate wage equations and account for possible sample selection bias. Our estimates of the wage equations are largely comparable to the earlier estimates. We extend the equations to predict wage rates for workers and non-workers by drawing from the estimated wage distribution. We find that sample selection is significant for married men, single women and sole parents but not significant for married women and single men. Overall, we find that wage rates are positively related to age, education and experience but the wage rates are generally lower for non-Europeans and for people living outside Auckland.

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File URL: http://www.treasury.govt.nz/publications/research-policy/wp/2014/14-09/twp14-09.pdf
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Bibliographic Info

Paper provided by New Zealand Treasury in its series Treasury Working Paper Series with number 14/09.

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Length: 53
Date of creation: Apr 2014
Date of revision:
Handle: RePEc:nzt:nztwps:14/09

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Related research

Keywords: wage rate; labour supply; selection bias; wage prediction;

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References

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  1. Dean Hyslop & Dave Maré, 2009. "Skill Upgrading in New Zealand, 1986-2001," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 42(4), pages 422-434.
  2. Heckman, James J, 1979. "Sample Selection Bias as a Specification Error," Econometrica, Econometric Society, Econometric Society, vol. 47(1), pages 153-61, January.
  3. Geoff Lewis & Steven Stillman, 2007. "Regional economic performance in New Zealand: How does Auckland compare?," New Zealand Economic Papers, Taylor & Francis Journals, Taylor & Francis Journals, vol. 41(1), pages 29-68.
  4. Guyonne Kalb & Rosanna Scutella, 2004. "Wage and employment rates in New Zealand from 1991 to 2001," New Zealand Economic Papers, Taylor & Francis Journals, Taylor & Francis Journals, vol. 38(1), pages 21-47.
  5. Robert Breunig & Joseph Mercante, 2010. "The Accuracy of Predicted Wages of the Non-Employed and Implications for Policy Simulations from Structural Labour Supply Models," The Economic Record, The Economic Society of Australia, The Economic Society of Australia, vol. 86(272), pages 49-70, 03.
  6. John Creedy & Alan S. Duncan, 2000. "Wage Functions for Demographic Groups in Australia," Australian Journal of Labour Economics (AJLE), Bankwest Curtin Economics Centre (BCEC), Curtin Business School, Bankwest Curtin Economics Centre (BCEC), Curtin Business School, vol. 4(4), pages 296-316, December.
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