Unemployment Dynamics in New Zealand 1985-1994

Abstract

The quarterly change in the number of unemployed New Zealanders is usually quite small relative to the total number of people unemployed. For the year ended September 1994, for example, the absolute average quarterly change in Household Labour Force Survey (HLFS) unemployment was 10,500 people against a quarterly average unemployment pool of 145,000 people. These relatively small stock changes, however, conceal the much larger flows into and out of unemployment of possibly 70,000 people during each quarter of 1993194. The scale of these flows, and the associated probabilities of entering and leaving unemployment, are not widely known. Using data from the HLFS, this paper updates and extends the relatively small amount of New Zealand research on labour market dynamics. It begins with a definition and data on the unemployment stock-flow relationship in New Zealand. This is followed by a brief analysis of the flows between the major labour market states and the associated flow rates and cycles. The paper will indicate how gross flows data can be used to give insights into gender and age differences in unemployment and 'steady-state' outcomes. The accuracy of gross flows data and the formal modelling of unemployment inflows and outflows are on-going projects.