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The Employment Contracts Act 1991 and the labour share of income in New Zealand: an analysis of labour market trends 1939–2023

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  • Geoff Bertram
  • Bill Rosenberg

Abstract

The share of wages and salaries in New Zealand’s Net Domestic Income fell steadily from 1981 to 2002, with no apparent break in trend coinciding the Employment Contracts Act 1991 (the ECA). However, adjusting the aggregate wage-share measure to control for changes in the size of the employee workforce relative to the total adult population yields a measure that we call [following Pen, J. (1971) Income distribution, translated by T.S. Preston. Allen Lane, the Penguin Press] the Wage Ratio – compensation per employee relative to national income per adult. That ratio, supported by a statistical analysis of its components, highlights the early 1990s as a decisive turning point and shows how the conventionally-measured labour share may fail to identify crucial changes in the balance of power in the labour market.

Suggested Citation

  • Geoff Bertram & Bill Rosenberg, 2024. "The Employment Contracts Act 1991 and the labour share of income in New Zealand: an analysis of labour market trends 1939–2023," New Zealand Economic Papers, Taylor & Francis Journals, vol. 58(3), pages 261-287, September.
    • Handle: RePEc:taf:nzecpp:v:58:y:2024:i:3:p:261-287
    DOI: 10.1080/00779954.2024.2330894
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