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Qualifications, Employment and the Value of Human Capital, 1986-2001
New Zealand Treasury Working Paper 03/35
Published December 2003
Authors: Dean Hyslop, Dave Maré and Jason Timmins
This paper summarises the changing nature of qualifications across the working age population in New Zealand over the period from 1986 to 2001, and investigates the relationships between the changing qualification distribution and employment and income. First, the results confirm that there was a general upskilling of the population, as measured by formal educational qualifications. Second, we examine patterns of qualification change and employment growth measured in job groups, and find that the upskilling of the population occurred across a wide range of job-groups. Also, although the results show the employment growth was strongest in job-groups with high initial levels of skilled workers, employment growth is only weakly related to upskilling. Third, we decompose the change in the value of human capital into contributions due to changes in the qualification mix, changes in the (economic) returns to qualifications, and the interaction between these two factors. The value of human capital increased by 20% over the period: about 75% of this increase can be attributed to increasing incomes holding constant the mix of qualifications, 15-20% to an increasing skill mix, and the residual to interaction effects.
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- Table 1 - Qualification Distributions of Population Aged 20-59, 1986-2001
- Table 2 - Educational Attainment of the working age population & Expected Years of Schooling - Selected OECD countries (1998/99)
- Table 3 - Disaggregated Field of Study Distributions for Degree Qualifications, Population Aged 20-59: 1996-2001
- Table 4a - Skill-Intensity – Employed Workers, Aged 20-59
- Table 4b - Skill-Intensity – Labour Force, Aged 20-59
- Table 4c - Skill-Intensity – Population, Aged 20-59
- Table 5 - Regression Analysis of Employment Growth, 1986-2001
- Table 6 - Correlation of Employment Changes by Qualification, 1986-2001
- Table 7 - Decomposition of Changes in the Value of Human Capital, 1986-2001
- Table 8 - Decomposing the Change in the Value of Human Capital: Contributions by Qualification Group, 1986-2001
- Table A1 - Description of Industry and Occupation Codes
- Table A2 - Disaggregated Qualifications Distributions, Population Age 20-59: 1986-2001
- Table A3 - Disaggregated Field of Study Distributions, Population Age 20-59: 1996-2001
- Table A4a - Regression Analysis of Employment Growth, 1986-1991
- Table A4b - Regression Analysis of Employment Growth, 1991-1996
- Table A4c - Regression Analysis of Employment Growth, 1996-2001
- Table A5a - Correlation of Employment Changes by Qualification, 1986-1991
- Table A5b - Correlation of Employment Changes by Qualification, 1991-1996
- Table A5c - Correlation of Employment Changes by Qualification, 1996-2001
- Table A6a - Decomposing the Change in the Value of Human Capital: Contributions by Qualification Group, 1986-1991
- Table A6b - Decomposing the Change in the Value of Human Capital: Contributions by Qualification Group, 1991-1996
- Table A6c - Decomposing the Change in the Value of Human Capital: Contributions by Qualification Group, 1996-2001
- Figure 1 – Relationship Between Population Average income and Skill Intensity, 1986
- Figure 2a – Employment by Occupation and Industry, 1986
- Figure 2b – Employment by Occupation and Industry, 1991
- Figure 2c – Employment by Occupation and Industry, 1996
- Figure 2d – Employment by Occupation and Industry, 2001
- Figure 3 – Change in Industry-Occupation Populations, 1986-2001
- Figure 4 – Skill Intensity, Upskilling, and Population Growth, 1986-2001
- Figure 5 – Relative Income and Population-share movements, 1986-2001
- Figure A1 – Change in Industry-Occupation Populations, 1986-2001
- Figure A2a – Relative Income and Employment-share movements, 1986-2001
- Figure A2b – Relative Income and Labour Force-share movements, 1986-2001
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Acknowledgements
This paper was commissioned and funded as part of Treasury’s Economic Transformation project.
We thank Ron Crawford, Geoff Lewis, Steven Stillman, and participants at a Treasury seminar on an earlier version of this paper for comments and discussions. The analysis presented in this paper is based on confidentialised Census data provided by Statistics New Zealand.
Disclaimer
The views expressed in this Working Paper are those of the author(s) and do not necessarily reflect the views of the New Zealand Treasury. The paper is presented not as policy, but with a view to inform and stimulate wider debate.
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