Adjustment in Local Labour and Housing Markets

Arthur Grimes, David Mare and Melanie Morten

No 292850, Motu Working Papers from Motu Economic and Public Policy Research

Abstract: This paper analyses local labour and hosuing market adjustment in New Zealand from 1989 to 2006. We use a VAR approach to examine the adjustment of employment, employment rate, participation rate, wages, and house prices in response to employment shocks. Migration is a major adjustment response at both a national and regional level. Nationally, a 1% positive employment shock leads to a long-run level of employment 1.3% higher, with half of the extra jobs filled by migrants. A 1% region-specific employment shock raises the long-run regional share of employment by 0.5 percentage points, due entirely to in-migration. House price responses differ at different spatial scales. Nationally, house prices are very responsive to employment shocks: a 1% employment shock raising long run house prices by 6% , as may be expected with an upward sloping housing supply curve. Paradoxically, this relationship does not hold at the regional level.

Keywords: Labor and Human Capital; Public Economics (search for similar items in EconPapers)
Pages: 48
Date: 2007-08
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Persistent link: https://EconPapers.repec.org/RePEc:ags:motuwp:292850

DOI: 10.22004/ag.econ.292850

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