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Working paper

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

Issue date: 
Friday, 1 March 2002
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Publication category: 
JEL classification: 
J61 - Geographic Labor Mobility; Immigrant Workers
R23 - Urban, Rural, Regional, Real Estate, and Transportation Economics: Regional Migration; Regional Labor Markets; Population; Neighborhood Characteristics
Fiscal year: 

Formats and related files


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.

Last updated: 
Wednesday, 24 October 2007