Risk and the regions: the geography of labour market dynamics in New Zealand

Abstract

This study identifies regional differences in the way workers move between employment, joblessness and non-participation in ten New Zealand regions. We also identify gender differences in these regional labour dynamics. By applying a linear logit model to transitional probabilities derived from New Zealand Household Labour Force Survey panel data, regional differences in flow dynamics are estimated for the period 1986 to 1999, controlling for large seasonal, cyclical and trend effects of the macroeconomy which characterise this period. On the basis of the differences in labour dynamics revealed by our research, regions can be clustered into metropolitan, provincial or peripheral (economically declining) groups. We find that the risk of losing one's job and not finding another increases once workers leave the metropolitan labour markets and move through the provincial regions to the periphery. An interesting feature too is that jobless workers in the metropolitan regions are more likely than elsewhere to withdraw from the labour market but more likely to find a job once there. Gender differences in labour dynamics are generally consistent over the regions, except that women in the metropolitan regions have less risk of separating from employment, and have less mobility between employment and outside of the workforce than elsewhere. These findings illustrate the importance of non-participation in the labour adjustment process of regulating joblessness rates - a point not picked up on in existing regional flows studies. Overall, regional labour dynamics in New Zealand may be attributed to regional labour demand conditions. Agglomeration effects benefit workers in large urban labour markets, but elsewhere industrial effects and small job markets promote unstable employment conditions.