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Modelling Regional Labour Market Adjustment in New Zealand

Author

Listed:
  • Wai Kin Choy
  • David C Mare
  • Peter Mawson

    (Reserve Bank of New Zealand (Wai Kin Choy)
    Motu Economic and Public Policy Research Trust (Mare)
    The Treasury (Mawson))

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.

Suggested Citation

  • Wai Kin Choy & David C Mare & Peter Mawson, 2002. "Modelling Regional Labour Market Adjustment in New Zealand," Treasury Working Paper Series 02/01, New Zealand Treasury.
    • Handle: RePEc:nzt:nztwps:02/01
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    File URL: https://treasury.govt.nz/sites/default/files/2018-01/twp02-01.pdf
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    References listed on IDEAS

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    Cited by:

    1. 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.
    2. Mr. Tigran Poghosyan, 2018. "Regional Labor Mobility in Finland," IMF Working Papers 2018/252, International Monetary Fund.
    3. Brian Cushing & Jacques Poot, 2004. "Crossing boundaries and borders: Regional science advances in migration modelling," Advances in Spatial Science, in: Raymond J. G. M. Florax & David A. Plane (ed.), Fifty Years of Regional Science, pages 317-338, Springer.
    4. David C. Maré & Jason Timmins, 2003. "Moving to Jobs?," Working Papers 03_07, Motu Economic and Public Policy Research.
    5. 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, Te Ngira Institute for Population Research.
    6. Michelle Poland & David C Maré, 2005. "Defining Geographic Communities," Urban/Regional 0509016, University Library of Munich, Germany.
    7. 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.
    8. Murayama, Koji & Nagayasu, Jun, 2019. "Spatial Dependence, Social Networks, and Economic Structures in Regional Labor Migration," MPRA Paper 95691, University Library of Munich, Germany.
    9. Suzi Kerr & Andrew Aitken & Arthur Grimes, 2004. "Land Taxes and Revenue Needs as Communities Grow and," Public Economics 0403001, University Library of Munich, Germany.
    10. Werner, Daniel, 2013. "New insights into the development of regional unemployment disparities," IAB-Discussion Paper 201311, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
    11. John Janssen, 2002. "Long-term fiscal projections and their relationship with the intertemporal budget constraint: An application to New Zealand," Treasury Working Paper Series 02/05, New Zealand Treasury.

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    More about this item

    Keywords

    Regional labour market adjustment; Internal migration;

    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

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