Ideas for Growth?

There is much talk of the knowledge economy, and the central role of ideas and knowledge in generating economic growth. This paper provides a brief review of the economic literature on how skills/ knowledge/ ideas might contribute to higher output or higher rates of growth. Ideas are complementary inputs into production, in the sense that they raise the productivity of other inputs. Some of the complementarities may give rise to externalities—effects that do not have to be paid for. For investments in ideas to generate output growth, these complementarities must be particularly strong. I conclude with some comments on what policy makers can draw from the literature, which is some encouragement but little specific guidance.Economic growth, Endogenous growth models, Innovation

Indirect Effects of Active Labour Market Policies

This paper provides an overview of the analysis of the indirect effects of active labour market policies. Indirect effects arise where some of the improved labour market outcomes for programme participants come at the expense of other workers or jobseekers. The paper outlines some common theories about how indirect effects operate, and discusses approaches to estimating the strength of indirect effects. It also presents a brief summary of relevant empirical findings. The paper is intended as a relatively non-technical guide for policy analysts working on the design, costing, and evaluation of active labour market policies.Active labour market policies; Substitution; Displacement; General equilibrium effects

Ideas for Growth?

There is much talk of the knowledge economy, and the central role of ideas and knowledge in generating economic growth. This paper provides a brief review of the economic literature on how skills/ knowledge/ ideas might contribute to higher output or higher rates of growth. Ideas are complementary inputs into production, in the sense that they raise the productivity of other inputs. Some of the complementarities may give rise to externalities-effects that do not have to be paid for. For investments in ideas to generate output growth, these complementarities must be particularly strong. I conclude with some comments on what policy makers can draw from the literature, which is some encouragement but little specific guidance.Economic growth; Endogenous growth models; Innovation

What Do Endogenous Growth Models Contribute?

Endogenous growth theory is one of the mainstream economics approaches to modelling economic growth. This paper provides a non-technical overview of some key strands of the endogenous growth theory (EGT) literature, providing references to key articles and texts. The intended audience is policy analysts who want to understand the intuition behind EGT models. The paper should be accessible to someone without much economics training.Endogenous Growth, Innovation

Moving to Jobs?

This paper examines whether New Zealand residents move from low-growth to high-growth regions, using New Zealand census data from the past three inter-censal periods (covering 1986-2001). We focus on the relationship between employment growth and migration flows to gauge the strength of the relationship and the stability of the relationship over the business cycle. We find that people move to areas of high employment growth, but that the probability of leaving a region is less strongly related to that region's fortunes. We also find that migration flows to the metropolitan regions of Auckland, Canterbury and Wellington include a higher proportion of international immigrants compared with the rest of New Zealand.employment growth, migration, regional development

Understanding Changes in the Distribution of Household Incomes in New Zealand Between 1983-86 and 1995-98

This paper presents an analysis of changes in the distribution of gross household income and income inequality over the period 1983–1998. The analysis applies a semiparametric approach to study the effects of changes in the distribution of household types, and changes in National Superannuation (old age pension), household socio-demographic attributes and employment outcomes, and in the “economic returns” to such attributes and employment outcomes on the distribution of income, and uses kernel density methods to estimate these effects. This approach provides a visual appreciation of the shape of the income distribution, and is important in understanding how each of these factors affected different parts of the distribution over the period. We also estimate the effects of each of these factors on changes in various summary measures of inequality over the period. The results find that changes in household structure (particularly the declining proportion of two-parent families), attributes, and employment outcomes each contribute to the observed increase in inequality, while the changes in returns are estimated to reduce the level of inequality. Collectively these factors account for about 50 percent of the observed increase, depending on the measure of inequality used. The results confirm other research findings that the changes were concentrated during the late 1980s.Household income distribution; Inequality; Kernel density estimation

What do Endogenous Growth Models Contribute?

Endogenous growth theory is one of the mainstream economics approaches to modelling economic growth. This paper provides a non-technical overview of some key strands of the endogenous growth theory (EGT) literature, providing references to key articles and texts. The intended audience is policy analysts who want to understand the intuition behind EGT models. The paper should be accessible to someone without much economics training.Endogenous Growth, Innovation

Understanding Changes in Mâori Incomes and Income Inequality 1997-2003

This paper reports findings from a study of changes in Mâori income levels and income dispersion between 1997 and 2003. Data from Statistics New Zealand’s Income Survey are used to describe and evaluate the main changes in the Mâori income distribution in this period, which was marked by substantial increases in employment rates and improvements in the skill levels of working-aged Mâori. A parallel analysis of the main changes in the European/Pâkehâ income distribution is provided for comparative purposes. The results show significant reductions in the proportion of Mâori with no weekly income in the reference week, or incomes of $150–200 a week, and significant increases in the proportion with incomes above the peak income level of approximately$550 per week. Income inequality within the total working-aged Mâori population declined, while income inequality among employed Mâori was stable. An analysis of some of the key factors contributing to change in the income distribution suggests that the transition of many Mâori into employment during this period was the single most important driver of change.Individual income distribution; Inequality; Mâori; Kernel density estimation

Mâori Incomes:Investigating Differences Between Iwi

This paper investigates several factors that may be important for improving Mâori outcomes, and the extent to which their importance varies by iwi. Specifically, it examines the extent to which controlling for differences in characteristics of the European population and the populations of various iwi can account for the differences in income distribution between the groups. It finds that qualification levels are important—they account for an average of approximately 29% of the difference between iwi and European incomes. The differing age distributions and the proportions of the population with different work and labour force statuses also account for much of the difference. Residence in different types of urban or rural area appears less relevant, as does residence in different regional council areas. The sizes of the influences of the different factors vary considerably by iwi and sometimes by gender. This suggests that policies aimed at improving Mâori incomes may be more cost-effective if they target specific iwi.Income distribution, Mâori income, iwi, decomposition

Understanding Changes in Maori Incomes and Income Equality 1997-2003

This paper reports findings from a study of changes in Maori income levels and income dispersion between 1997 and 2003. Data from Statistics New Zealand's Income Survey are used to describe and evaluate the main changes in the Maori income distribution in this period, which was marked by substantial increases in employment rates and improvements in the skill levels of working-aged Maori. A parallel analysis of the main changes in the European/Pakeha income distribution is provided for comparative purposes. The results show significant reductions in the proportion of Maori with no weekly income in the reference week, or incomes of $150-200 a week, and significant increases in the proportion with incomes above the peak income level of approximately$550 per week. Income inequality within the total working-aged Maori population declined, while income inequality among employed Maori was stable. An analysis of some of the key factors contributing to change in the income distribution suggests that the transition of many Maori into employment during this period was the single most important driver of change.Individual income distribution; Inequality; Maori; Kernel density estimation