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Adjustment in Local Labour and Housing Markets

Author

Listed:
  • Grimes, Arthur
  • Mare, David
  • Morten, Melanie

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.

Suggested Citation

  • Grimes, Arthur & Mare, David & Morten, Melanie, 2007. "Adjustment in Local Labour and Housing Markets," Motu Working Papers 292850, Motu Economic and Public Policy Research.
    • Handle: RePEc:ags:motuwp:292850
    DOI: 10.22004/ag.econ.292850
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    Cited by:

    1. is not listed on IDEAS
    2. Stillman, Steven & Maré, David C., 2008. "Housing Markets and Migration: Evidence from New Zealand," Motu Working Papers 292651, Motu Economic and Public Policy Research.
    3. Stillman, Steven & Velamuri, Malathi & Aitken, Andrew, 2010. "The long-run impact of New Zealand's structural reform on local communities," Journal of Comparative Economics, Elsevier, vol. 38(4), pages 432-448, December.
    4. Julie Fry, 2014. "Migration and Macroeconomic Performance in New Zealand: Theory and Evidence," Treasury Working Paper Series 14/10, New Zealand Treasury.
    5. Rob Hodgson & Jacques Poot, 2011. "New Zealand Research on the Economic Impacts of Immigration 2005-2010: Synthesis and Research Agenda," RFBerlin Discussion Paper Series 1104, ROCKWOOL Foundation Berlin (RFBerlin).

    More about this item

    Keywords

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    JEL classification:

    • R23 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Regional Migration; Regional Labor Markets; Population
    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers
    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models

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