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Labour Force Participation and GDP in New Zealand

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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.

Suggested Citation

  • John Bryant & Veronica Jacobsen & Matthew Bell & Daniel Garrett, 2004. "Labour Force Participation and GDP in New Zealand," Treasury Working Paper Series 04/07, New Zealand Treasury.
    • Handle: RePEc:nzt:nztwps:04/07
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    File URL: https://treasury.govt.nz/sites/default/files/2018-04/twp04-07v2.pdf
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    References listed on IDEAS

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    1. Florence Jaumotte, 2003. "Female Labour Force Participation: Past Trends and Main Determinants in OECD Countries," OECD Economics Department Working Papers 376, OECD Publishing.
    2. Guyonne Kalb & Rosanna Scutella, 2004. "Wage and employment rates in New Zealand from 1991 to 2001," New Zealand Economic Papers, Taylor & Francis Journals, vol. 38(1), pages 21-47.
    3. Rebecca M. Blank, 2002. "Evaluating Welfare Reform in the United States," Journal of Economic Literature, American Economic Association, vol. 40(4), pages 1105-1166, December.
    4. Rebecca M. Blank, 2000. "Distinguished Lecture on Economics in Government: Fighting Poverty: Lessons from Recent U.S. History," Journal of Economic Perspectives, American Economic Association, vol. 14(2), pages 3-19, Spring.
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    Cited by:

    1. Grant Johnston, 2005. "Women’s participation in the labour force," Treasury Working Paper Series 05/06, New Zealand Treasury.
    2. Janneke Plantenga, 2015. "The Economics of Gender Equality – A Review of the Literature in Three Propositions and Two Questions. WWWforEurope Working Paper No. 104," WIFO Studies, WIFO, number 58262, February.
    3. M. Cameron & W. Cochrane & J. Poot, 2008. "End-user Informed Demographic Projections for Hamilton up to 2041," Population Studies Centre Discussion Papers dp-66, University of Waikato, Te Ngira Institute for Population Research.
    4. Productivity Commission, 2007. "Potential Benefits of the National Reform Agenda," Research Papers 0701, Productivity Commission, Government of Australia.
    5. Debbra Toria Nipo & Jaratin Lily & Sidah Idris & Saizal Pinjaman & Imbarine Bujang, 2023. "Information and Communication Technology (ICT) on Economic Growth in Asia: A Panel Data Analysis," International Journal of Business and Management, Canadian Center of Science and Education, vol. 17(12), pages 1-18, February.

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    More about this item

    Keywords

    Labour force participation; female labour force participation; New Zealand; productivity;
    All these keywords.

    JEL classification:

    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
    • O56 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Oceania

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