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The Incidence and Persistence of Cyclical Job Loss in New Zealand

Author

Listed:
  • Maré, Dave C.

    () (Motu Economic and Public Policy Research Trust)

  • Fabling, Richard

    () (Independent Researcher)

Abstract

In New Zealand, the impact of the Global Financial Crisis (GFC) was milder than in most other developed countries, with employment declining by 2.5 percent between 2008q4 and 2009q4. Job and worker turnover rates both declined, signalling a reduction in labour market liquidity and difficulties for new entrants and high-turnover groups of workers (Fabling and Maré, 2012). The current paper documents the extent and composition of employment change between 2000 and 2011, focusing on the 2008-2010 period, when the labour market impacts of the GFC were strongest. As in previous downturns, the incidence of cyclical job loss and unemployment fell disproportionately on young and unskilled workers. The paper identifies, by age, gender and earnings level, the sensitivity of employment growth and labour market flows to aggregate employment fluctuations and also to relative fluctuations across industries and regions. The accession rate is particularly sensitive to the economic cycle, most strongly for young workers. Differences in the size of cyclical employment fluctuations reflect differing responsiveness to common shocks and not exposure to different industry and local shocks. Finally, the paper traces outcomes for workers whose jobs end, summarising their duration out of work and the wage increases or reductions they experience when they secure employment. Workers who left or lost jobs spent longer out of work after the GFC and settled for lower earnings growth when they did find a job. Both of these effects had partly but not fully abated within 3 years of the onset of the GFC.

Suggested Citation

  • Maré, Dave 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).
  • Handle: RePEc:iza:izadps:dp7745
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    References listed on IDEAS

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    11. Richard Fabling & David C. Maré, 2012. "Cyclical Labour Market Adjustment in New Zealand: The Response of Firms to the Global Financial Crisis and its Implications for Workers," Working Papers 12_04, Motu Economic and Public Policy Research.
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    Cited by:

    1. Nathan Chappell & Isabelle Sin, 2016. "The Effect of Trial Periods in Employment on Firm Hiring Behaviour," Working Papers 16_10, Motu Economic and Public Policy Research.
    2. Nathan Chappell & Isabell Sin, 2016. "The Effect of Trial Periods in Employment on Firm Hiring Behaviour," Treasury Working Paper Series 16/03, New Zealand Treasury.
    3. Richard Fabling & David C Maré, 2015. "Addressing the absence of hours information in linked employer-employee data," Working Papers 15_17, Motu Economic and Public Policy Research.

    More about this item

    Keywords

    Global Financial Crisis; cyclical job loss; unemployment; earnings growth;

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure

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