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Labour Force Participation and GDP in New Zealand

  • John Bryant
  • Veronica Jacobsen
  • Matthew Bell
  • Daniel Garrett

    ()

    (New Zealand Treasury)

New Zealand's participation rates are high relative to the OECD, and similar OECD countries. However, there is scope for increasing participation, particularly among young women. Increases in labour force participation could make a contribution towards closing the income gap between New Zealand and wealthier OECD countries. In this paper we calculate the effect on GDP of hypothetical increases in employment from increased participation, taking into account the differences in productivity between new and existing workers. The results suggest that increasing the labour force participation of women aged 25-34 to the average, adjusted for paid maternity leave, of the top 5 OECD nations increases employment by 28,800 and generates an additional $1,215 million of GDP, making GDP 1.0% higher than it actually was in the baseline year 2001. Raising participation overall to the average of the top 5 OECD countries increases employment by 142,600 and generates additional $6,101 million of GDP, an increase of 5.1% more than it would otherwise have been.

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File URL: http://www.treasury.govt.nz/publications/research-policy/wp/2004/04-07/twp04-07.pdf
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Paper provided by New Zealand Treasury in its series Treasury Working Paper Series with number 04/07.

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Length: 26 pages
Date of creation: Jun 2004
Date of revision:
Handle: RePEc:nzt:nztwps:04/07
Contact details of provider: 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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  1. Florence Jaumotte, 2003. "Female Labour Force Participation: Past Trends and Main Determinants in OECD Countries," OECD Economics Department Working Papers 376, OECD Publishing.
  2. Rebecca M. Blank, 2002. "Evaluating Welfare Reform in the United States," NBER Working Papers 8983, National Bureau of Economic Research, Inc.
  3. Rebecca M. Blank, 2000. "Distinguished Lecture on Economics in Government: Fighting Poverty: Lessons from Recent U.S. History," Journal of Economic Perspectives, American Economic Association, vol. 14(2), pages 3-19, Spring.
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