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Modelling Regional Labour Market Adjustment in New Zealand - WP 02/01

Publication Details

  • Modelling Regional Labour Market Adjustment in New Zealand
  • Published: Mar 2002
  • Status: Current
  • Authors: Choy, Wai Kin; Mar?, David (Dave) C; Mawson, Peter
  • JEL Classification: J61; R23
  • Hard copy: Available in PDF format only.
 

Modelling Regional Labour Market Adjustment in New Zealand

New Zealand Treasury Working Paper 02/01

Published Mar 2002

Authors: Wai Kin Choy, David C Mare and Peter 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.

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