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Regional Economic Performance in New Zealand: How Does Auckland Compare? - WP 05/08

Publication Details

  • Regional Economic Performance in New Zealand: How Does Auckland Compare?
  • Published: Nov 2005
  • Status: Current
  • Authors: Lewis, Geoff; Stillman, Steven
  • JEL Classification: J26
  • Hard copy: Available in HTML and PDF formats only.
 

Regional Economic Performance in New Zealand: How Does Auckland Compare?

New Zealand Treasury Working Paper 05/08

November 2005

Authors: Geoff Lewis and Steven Stillman

Abstract

In this study we investigate Auckland’s economic performance relative to other large cities in New Zealand, to medium-sized urban centres and to small towns and rural areas. Measures of regional economic performance are not well developed in New Zealand and there is a relative lack of official data at the regional level. Previous measures developed by two non-governmental organisations have suggested that Auckland is “underperforming” relative to other regions in New Zealand. However, neither of these measures satisfactorily capture productivity performance by areas that are classified according to the density of economic activity that takes place within them.

We use data from the annual New Zealand Income Survey to examine hourly earnings and other measures of labour productivity and utilisation for a number of regional areas. Our results tell a fairly consistent story. Auckland and Wellington have the highest levels of productivity performance based on almost all measures of earnings. In particular, both have significantly higher average levels of labour income, and wage rates than the three other comparison areas. Auckland has also experienced stronger growth in wages, in particular for wage/salary workers, than other regions.

Our findings cast doubt on the hypothesis that Auckland has been a productivity underperformer within New Zealand. In fact, Auckland appears to be a relatively good performer and this is consistent with agglomeration economies being at work in New Zealand’s largest urban concentration. However, because we limited our investigations to within New Zealand we are not able to say how Auckland’s productivity performance compares to innovative, high-skill cities in other countries. Given New Zealand’s overall poorer performance in labour productivity and the rather modest wage rate growth that we find even for Auckland, it is unlikely to have been as good.

Table of Contents

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Abstract

Table of Contents

List of Tables

List of Figures

1. Introduction

2. Background and motivation

3. Data and methodology

4. Empirical results

5. Comparisons with other studies

6. Summary and conclusions

References

Appendix

twp05-08.pdf (281 KB) pp. 39

List of Tables

List of Figures

Acknowledgements

We thank Johannah Branson, Ron Crawford, Richard Fabling, Dean Hyslop, Arthur Grimes, John McDermott, Dave Maré, Megan Claridge, Warwick Terry, and seminar participants at the New Zealand Treasury for helpful comments.

disclaimer

The views, opinions, findings, and conclusions or recommendations expressed in this Working Paper are strictly those of the author(s). They do not necessarily reflect the views of the New Zealand Treasury, Motu Economic and Public Policy Research, or Statistics New Zealand. The Treasury takes no responsibility for any errors or omissions in, or for the correctness of, the information contained in these working papers. The paper is presented not as policy, but with a view to inform and stimulate wider debate. Access to the data used in this study was provided by Statistics New Zealand under conditions designed to give effect to the security and confidentiality provisions of the Statistics Act 1975.

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