Does cyclical employment growth lower wages?

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Document Format: PDF

Publication Year: 2008

Authors:
Dean Hyslop

Abstract

In New Zealand’s economic upswing, data from 1999 to 2007 shows employment growth of more than 20 percent and average real wages increases of around 9 percent. This seminar discusses the extent to which employment growth favoured low-skilled and low-paid workers during this period, in turn changing the composition of the workforce and lowering measured average wage growth. Furthermore, similar composition changes plausibly also affect measured productivity – to the extent wages provide a reasonable proxy for labour productivity. If so, effective productivity growth was better over the period than suggested by the measured series.