Labour Force Participation and GDP in New Zealand

John Bryant (), Veronica Jacobsen (), Matthew Bell and Daniel Garrett ()
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Daniel Garrett: New Zealand Treasury

No 04/07, Treasury Working Paper Series from New Zealand Treasury

Abstract: 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.

Keywords: Labour force participation; female labour force participation; New Zealand; productivity (search for similar items in EconPapers)
JEL-codes: J21 J24 O12 O56 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-lab
Date: 2004-06
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