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Investigating a Wage Curve for New Zealand

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  • Kerry Papps

Abstract

This paper examines evidence for a stable inverse relationship between the wages paid to workers and the unemployment rate across local labour markets in New Zealand, a phenomenon known as the wage curve. A variety of specifications of the wage curve are examined. Overall, weighted least squares estimates reveal a value of the unemployment elasticity of pay that is close to the international consensus estimate of— 0.1. Some support is also found for the concept of a positive long-run relationship between wages and unemployment existing alongside the wage curve. However, there is evidence of potential endogeneity of the unemployment rate, although data limitations severely restrict the availability of suitable instruments.

Suggested Citation

  • Kerry Papps, 2001. "Investigating a Wage Curve for New Zealand," New Zealand Economic Papers, Taylor & Francis Journals, vol. 35(2), pages 218-239.
    • Handle: RePEc:taf:nzecpp:v:35:y:2001:i:2:p:218-239
    DOI: 10.1080/00779950109544340
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    References listed on IDEAS

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    1. Timothy J. Bartik, 1991. "Who Benefits from State and Local Economic Development Policies?," Books from Upjohn Press, W.E. Upjohn Institute for Employment Research, number wbsle, December.
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    Cited by:

    1. Peter Nijkamp & Jacques Poot, 2005. "The Last Word on the Wage Curve?," Journal of Economic Surveys, Wiley Blackwell, vol. 19(3), pages 421-450, July.
    2. Mark Partridge & Dan Rickman, 2010. "Computable General Equilibrium (CGE) Modelling for Regional Economic Development Analysis," Regional Studies, Taylor & Francis Journals, vol. 44(10), pages 1311-1328.
    3. Van Trinh, Le Thi & Gibson, John & Oxley, Les, 2005. "Measuring the stock of human capital in New Zealand," Mathematics and Computers in Simulation (MATCOM), Elsevier, vol. 68(5), pages 484-497.
    4. Morrison, Philip S. & Papps, Kerry L. & Poot, Jacques, 2006. "Wages, employment, labour turnover and the accessibility of local labour markets," Labour Economics, Elsevier, vol. 13(5), pages 639-663, October.

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