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

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

The Impact of Immigration on the Labour Market Outcomes of New Zealanders

This paper uses data from the 1996, 2001 and 2006 New Zealand Census to examine how the supply of immigrants in particular skill-groups affects the employment and wages of the New Zealand-born and of earlier migrants. We first estimate simple CES production functions that allow for substitutability between workers from different skill-groups, but assume that, within skill-groups, migrants are perfect substitutes for non-migrants. We next estimate hierarchical CES production functions that allow for substitutability between immigrant and non-immigrant workers within skillgroups, but constrain the patterns of wage impacts on different factors in response to changing factor shares, and that natives and migrants are not substitutable across skill-groups. Then, we extend the previous literature by estimating a Generalised Leontief production function that allows for a less restrictive relationship between changes in factors shares and changes in wages within a particular level of the production function and for substitution and complementarity between immigrant and nonimmigrant workers both between and across skill-groups. Regardless of the model being estimated, we find little evidence that immigrants negatively affect either the wages or employment opportunities of the average New Zealand-born worker. However, we find some evidence that increases in the number of high-skilled recent migrants have small negative impacts on the wages of high-skilled New Zealand-born workers, which are offset by small positive impacts on the wages of medium-skilled New Zealanders.Immigration, Wage Impacts, New Zealand, Labour Market Areas

Housing Markets and Migration: Evidence from New Zealand

New Zealand's large and volatile external migration flows generate significant year-to-year fluctuations in the demand for residential housing. This paper uses population data from the 1986, 1991, 1996, 2001 and 2006 New Zealand Censuses, house sales price data from Quotable Value New Zealand and rent data from the Department of Building and Housing to examine how population change, international migration, including the return migration of New Zealanders abroad, and internal migration affect rents and sales prices of both apartments and houses in different housing markets in New Zealand. Our analysis focuses on the relationship between the changes in the population in local areas and changes in house sale prices and rents in these areas. Focusing on changes allows us to control for time-invariant unobservable characteristics of local areas that either attract or repel individuals and lead to differential costs of housing.Immigration, Housing Markets, House Prices, New Zealand, Internal Migration