Template-Type: ReDIF-Paper 1.0
Author-Name:  Arthur Grimes
Author-X-Name-First: Arthur 
Author-X-Name-Last: Grimes
Author-Email:  arthur.grimes@motu.org.nz
Author-Workplace-Name: Motu Economic and Public Policy Research 
Author-Name:  David C. Maré
Author-X-Name-First: David 
Author-X-Name-Last: Maré
Author-Email:  dave.mare@motu.org.nz
Author-Workplace-Name: Motu Economic and Public Policy Research
Author-Name: Melanie Morten
Author-X-Name-First: Melanie 
Author-X-Name-Last: Morten
Author-Email: melanie.morten@motu.org.nz 
Author-Workplace-Name: Motu Economic and Public Policy Research
Title:  Adjustment in Local Labour and Housing Markets
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.
Length:  48 pages
Creation-Date:  2007-08
File-URL: https://motu-www.motu.org.nz/wpapers/07_10.pdf
Number: 07_10
Classification-JEL: R23, J61, C33
Keywords: Regional Labour Market Adjustment; Internal Migration; House Prices; Vector Autoregression
Handle: RePEc:mtu:wpaper:07_10