bluuebunny/crossref_metadata_2025 huggingface dataset:
Infrastructures Long-Lived Impact on Urban Development: Theory and Empirics
Authors:   Motu Economic and Public Policy Research, Grimes Arthur , Apatov Eyal , Lutchman Larissa , Robinson Anna
Published: April 2018

We analyse impacts that infrastructure provision and other factors have on long run urban growth. Reflecting spatial equilibrium insights, growing cities have preferred attributes relative to other cities. These attributes may include natural characteristics, social amenities and transport infrastructure that have productive and/or amenity value. We outline a theoretical model that includes distance-related effects on individual utility and thence population location, and we test this model using historical data covering 1926 to 2006 across 56 New Zealand towns. Instruments dating back to 1880 are used to deal with potential endogeneity issues, and we use spatial-econometrics techniques to test for spatial spillovers between cities. Our analysis shows that four dominant factors have impacted positively on urban growth, especially since 1966: nearby land-use capability, human capital, sunshine hours and proximity to the countrys dominant city, Auckland.
Modelling Changing Rural Land Use in New Zealand 1997 to 2008 Using a Multinomial Logit Approach
Authors:   Motu Economic and Public Policy Research, Dorner Zack , Hyslop Dean
Published: April 2018

Rural land use in New Zealand is an important driver of economic activity and has clear implications for the environment, including for biodiversity, climate change emissions and water quality. The spatial distribution and aggregate shares of rural land use is always changing, but change occurs slowly. To better understand the drivers of rural land use change, this paper addresses three questions using the popular multinomial logit modelling approach. First, do recent commodity prices have any predictive power on land use conversions? Second, is recently sold land more likely to change use? Third, does land which is marginal between uses have identifiable characteristics? The data used consists of the New Zealand Landcover Database version 3 (LCDB3), with observations in 1997, 2002 and 2008; 6 year average profitability data for dairy, sheep and beef and forestry; QVNZ land sales data; and I control for land quality and Maori tenure. In answering the first and third questions, I evaluate the predictive power of a spatially explicit land use share multinomial logit model, estimated from 2002 cross-sectional variation. To supplement the land use share multinomial logit for questions one and three, and to address question two, I use a land use transition multinomial logit, estimating the likelihood of transition from a single starting land use between 1997 and 2002, similar to Lubowski et al. (2008). Finally, I compare the two modelling approaches.
That Sinking Feeling: The Changing Price of Disaster Risk Following an Earthquake
Authors:   Motu Economic and Public Policy Research, Timar Levente , Grimes Arthur , Fabling Richard
Published: April 2018

We treat the Canterbury (Christchurch) earthquake sequence as a potential source of new risk information to home buyers in New Zealand. We compare pre- and post-earthquake sales of properties in two other urban areas of the country (one with high and one with low seismicity) to estimate how the pricing of earthquake-related risks changed following the Canterbury earthquakes. Specifically, we test for changes in risk premia associated with soil liquefaction potential, previously a largely ignored hazard, and changes in premia for house construction types (such as brick) that previously were well-known to be less safe in an earthquake. By exploiting two types of risk (one previously ignored and one well-recognised by households) across two areas with differing seismic risks, pre- and post-earthquake, we use a difference-in-difference-in-difference approach to test hypotheses about how people respond to a new clearly defined risk that is important only in certain circumstances. We find no evidence that the price of known construction risk changed in either seismic area and no evidence of a change in the price of liquefaction risk in the low seismic area following the Canterbury earthquakes. However, we do find strong evidence that a liquefaction risk discount emerged in the high seismic area immediately after the Canterbury earthquakes. These findings are all in accord with rational responses to risk following the earthquakes. However, the liquefaction risk discount in the high seismic area dissipated after two years and had disappeared entirely within three years of the earthquakes. This finding is similar to those identified in a limited number of previous empirical studies on responses to natural hazard events. While we cannot rule out entirely that this time-varying risk premium is a rational response to risk (e.g. because of changing expectations around insurable versus non-insurable risks), we find it more plausible that these changing risk discounts reflect behavioural responses to risk as indicated in the cognitive dissonance literature.
Exporting, Innovation and the Role of Immigrants
Authors:   Motu Economic and Public Policy Research, Sin Isabelle , Fabling Richard , Jaffe Adam B. , Maré David C. , Sanderson Lynda
Published: April 2018

This research uses Statistics New Zealands Integrated Data Infrastructure and data from the Business Operations Survey to investigate the correlations at the firm level between a) employee characteristics and firm international engagement, and b) firm international engagement and innovation. The main findings on employee characteristics and international engagement are: Firms that employ a higher fraction of high-ability foreigners (and thus a lower fraction of high-ability natives) are more likely to export; Firms that employ a higher proportion of people who previously worked for an exporter are more likely to export; The proportions of foreign employees and employees with export experience are correlated with many other types of international engagement by firms; Employees from Australia and the Pacific and from Europe are positively correlated with firm exporting. The correlations are absent for foreign employees from Asia; The probability that a firm earns income in a given country is more correlated with its fraction of employees from that country than with its total fraction of foreign employees; A firm with a higher fraction of employees from a given country is more likely to earn income in that country only if the country is developed. The main findings on international engagement and innovation are: Firms that export innovate more, even after controlling for size; Among exporters, the proportion of firm sales that comes from exports shows little correlation with innovation; Firms that export to more countries innovate more; Exports of raw goods have little correlation with innovation; exports of manufactured goods or services have a strong correlation; Firms that recently entered a new export market report especially high innovation, and firms that began earning overseas income in the previous two years report higher innovation than those that have earned overseas income for a longer period; Not all export destinations are correlated with higher innovation. Exports to the Americas are positively correlated with innovation, but there is no evidence that firms that export more to Asia are more likely to innovate; In addition to exporting, most other types of international engagement, such as inward and outward foreign direct investment, are positively correlated with innovation; Firms' sources of ideas for innovation vary with the types of international engagement in which they are involved. The patterns are consistent with exporters gaining ideas from their international customers, firms gaining ideas from their foreign owners, and importers gaining ideas from their foreign suppliers. Although these relationships are correlations only and should not be interpreted as proof of causality, they do suggest that the experience and specialized knowledge of employees may be relevant to firms decisions to engage internationally, and that such engagement may act as a conduit for foreign knowledge to enter the country.
Productivity distributions in New Zealand: The dangers of international comparison
Authors:   Motu Economic and Public Policy Research, Fabling Richard , Sanderson Lynda
Published: April 2018

Recent discussions of New Zealand's relative economic performance have drawn a link between firm-level productivity dispersion and a lack of competitive pressure. This note describes a simple example using New Zealand firm-level data which casts doubt on the assertion that New Zealand has a long tail of low productivity firms relative to other countries.
Are Patent Fees Effective at Weeding Out Low-Quality Patents?
Authors:   Motu Economic and Public Policy Research, de Rassenfosse Gaétan , Jaffe Adam B.
Published: April 2018

The paper investigates whether patent fees are an effective mechanism to deter the filing of low-quality patent applications. The study analyses the effect of the Patent Law Amendment Act of 1982, which resulted in a substantial increase in patenting fees at the U.S. Patent and Trademark Office, on patent quality. Results from a series of difference-in-differences regressions suggest that the increase in fees led to a weeding out of low-quality patents. About 1617 per cent of patents in the lowest quality decile were filtered out. The figure reaches 2430 per cent for patents in the lowest quality quintile. However, the fee elasticity of quality decreased with the size of the patent portfolio held by applicants. The study has strong policy implications in the current context of concerns about declines in patent quality and the financial vulnerability of patent offices.
Impacts of Planning Rules, Regulations, Uncertainty and Delay on Residential Property Development
Authors:   Motu Economic and Public Policy Research, Grimes Arthur , Mitchell Ian
Published: April 2018

Dwelling prices are determined in the long run by the total costs of a development, where costs include regulatory costs, including costs of delay and uncertainty. We outline a conceptual framework for the development process and then develop a real options model of housing development that indicates more formally how regulatory policies and regulatory practices affect development decisions. We apply these insights to the design of a survey of property developers active in the Auckland market, with an emphasis on the affordable part of the market. In surveying developers, we aim to elicit their views regarding the impacts that planning rules and regulations have on total development costs. We do not attempt to value the corresponding benefits of the planning rules and regulations, so this study is not a cost: benefit analysis of council planning approaches; rather it documents the costs of the rules and regulations  as perceived by developers  to provide a basis for benefits to be compared. Almost 90% of surveyed developers have been affected by delays or uncertainties related to regulation. Regulations that have had major effects on the actual building costs of apartments include: building height limits, balcony requirements, conforming to Councils desired mix of apartment typologies and minimum floor to ceiling heights. Major cost effects on developing residential sections and standalone dwellings include: infrastructure contributions not related to the specific development, section size requirements, extended consent processes and urban design considerations stemming from Councils urban designers. Reserve and development contributions and Watercare levies affect the costs of both types of development. Excluding the cost of Watercare and reserve and development contributions, the typical cost range of the total impact of regulations is estimated to vary between $32,500 and $60,000 per dwelling in a subdivision. In terms of affordable apartments, assuming the total internal floor area remains the same and no deck is built, the impact on total cost typically is estimated to range between $65,000 and $110,000 per apartment.
Economic Liberalisation and the Mobility of Minority Groups: Evidence from M?ori in New Zealand
Authors:   Motu Economic and Public Policy Research, Sin Isabelle , Stillman Steven
Published: April 2018

Between 1984 and 2003, New Zealand undertook comprehensive market-oriented economic reforms. In this paper, we use Census data to examine how the internal mobility of M?ori compares to that of Europeans in New Zealand in the period after these reforms. It is often suggested that M?ori are less mobile than other ethnic groups because of attachment to particular geographical locations. If this were the case, M?ori may have been disadvantaged in the post-reform period because they were more likely to be living in adversely affected areas and less likely to move to pursue better employment opportunities. In contrast to the anecdotal evidence, we find that M?ori are more mobile on average than similar Europeans. However, M?ori who live in areas with strong networks of their iwi are slightly less mobile than Europeans. The difference between M?ori who live locally to their iwi and those who do not is even more pronounced when we consider responsiveness to local labour market shocks. Non-local M?ori are considerably more responsive to changes in economic opportunities than are Europeans, whereas local M?ori are almost entirely unresponsive.
The impact of tax changes on the short-run investment behaviour of New Zealand firms
Authors:   Motu Economic and Public Policy Research, Fabling Richard , Kneller Richard , Sanderson Lynda
Published: April 2018

This paper examines firm-level investment responses to exogenous changes in the forward looking user cost of capital associated with reforms to the corporate and personal tax system over the last decade. Adjustments to personal tax rates and fiscal depreciation allowances provide a direct lever through which government policy can affect the cost of capital faced by firms. The effect of these tax adjustments differs across firms according to their asset structure, providing both inter-temporal and inter-firm variation in UCCs and enabling an assessment of the short-run impact of UCC changes on investment behaviour. This analysis shows that while tax-induced changes in the UCC have significantly affected investment behaviour among some firms, the aggregate impacts are likely to have been negligible as the industries in which investment impacts are observed make a very small contribution to aggregate investment.
Exchange rate fluctuations and the margins of exports
Authors:   Motu Economic and Public Policy Research, Fabling Richard , Sanderson Lynda
Published: April 2018

This paper examines the relationship between exchange rate fluctuations and New Zealand export performance. To isolate the impact of the exchange rate, as opposed to contemporaneous (and related) fluctuations in New Zealands economic performance or overseas market characteristics, we focus on bilateral export relationships at the firm level and control for both time-invariant country characteristics and changes in aggregate economic conditions. We examine two key margins of export adjustment  the probability of exporting (the extensive margin) and the average value of exports per firm (the intensive margin)  and distinguish between impacts on market incumbents and new or potential entrants. Finally, we specifically take account of the potential for interaction between the level and volatility of the exchange rate to affect exporting, as implied by theories of exchange rate hysteresis.
Are we turning a brighter shade of green? The relationship between household characteristics and greenhouse gas emissions from consumption in New Zealand
Authors:   Motu Economic and Public Policy Research, Allan Corey , Kerr Suzi , Will Campbell
Published: April 2018

We test whether New Zealand households have become greener consumers by estimating environmental Engel curves (EECs), which describe the relationship between household income and the pollution embodied in a households consumption bundle. Our pollutants of interest are greenhouse gases (GHGs). To our knowledge, this is the first paper that tests for a change over time in climate change-related household behaviour. We calculate the greenhouse gases embodied in household consumption bundles using standard environmental input-output (IO) analysis combined with detailed household expenditure data from the 2006/07 and 2012/13 waves of the New Zealand Household Economic Survey. Consistent with international literature, we find that emissions increase less-than-proportionately with household expenditure (a proxy for permanent income). There is significant variation in expenditure elasticities across consumption categories; emissions from household energy are unresponsive to household expenditure, while emissions from transport are highly responsive to expenditure. Household expenditure and composition explain the majority of the cross-sectional variation in household emissions. We conduct a simple test for changes over time in household consumption patterns that affect emissions, taking price changes into account. We find that, controlling for a rich set of household characteristics, household emissions were marginally lower on average in the 2012/13 survey than the 2006/07 survey. This result is largely driven by a reduction in emissions from household energy. We also find that wealthier households had a smaller reduction in emissions between surveys. Our results suggest this is due to higher levels of international air travel by wealthier households.
Nitrogen Trading in Lake Taupo: An Analysis and Evaluation of an Innovative Water Management Policy
Authors:   Motu Economic and Public Policy Research, Duhon Madeline , Kerr Suzi
Published: April 2018

This paper provides an overview and early evaluation of the Lake Taupo nitrogen cap and trade programme, established as part of Waikato Regional Councils 2011 Regional Plan Variation Five. The policy establishes a catchment-wide cap on nitrogen losses by allocating farmers individual nitrogen discharge allowances and allowing those farmers flexibility to trade allowances amongst themselves and to sell allowances to a public fund while remaining within the overall catchment cap. The Taupo trading scheme is the worlds first agricultural non-point-source water-quality cap and trade scheme. This paper explains the structure and evolution of the nitrogen trading market, and analyses its impact thus far. Research drawn from written material and descriptive quantitative data provides the basis for analysing the policy, while interviews with relevant stakeholders provide insight into the successful, surprising and contentious issues that arose throughout its development and implementation.
A New Cross-Country Measure of Material Wellbeing and Inequality: Methodology, Construction and Results
Authors:   Motu Economic and Public Policy Research, Grimes Arthur , Hyland Sean
Published: April 2018

This paper advances a new framework for defining a countrys material wellbeing based on the distribution of consumer durables, building on the recent material wellbeing literature that calls for an increased focus on both the level and the distribution of consumption and wealth. Our framework is demonstrated using household-level data from the OECD PISA surveys, from which triennial metrics are constructed consistently for 40 countries since 2000. Comparisons with income-based alternative metrics suggest that our consumption-based measure captures important aspects of material wellbeing at both the micro and the macro level. Differences between the two approaches is shown to be associated with life-cycle smoothing, an important aspect that should be captured in material wellbeing estimates.
Relative Income and Subjective Wellbeing: Intra-national and Inter-national Comparisons by Settlement and Country Type
Authors:   Motu Economic and Public Policy Research, Grimes Arthur , Reinhardt Marc
Published: April 2018

We extend the Easterlin Paradox (EP) literature in two key respects, testing whether inter-national as well as intra-national income comparisons matter for subjective wellbeing, and testing whether these effects differ by settlement-type as well as by country-type. We confirm the intra-national EP predictions (that subjective wellbeing is left unchanged by an equi-proportionate rise in all intra-country incomes) across four developed country settlement types ranging from rural areas to large cities. The EP result also holds for rural areas in transitional countries but not for larger settlement sizes in those countries. For all country-settlement types, we confirm the importance also of inter-national income comparisons in determining peoples subjective wellbeing. Again, however, the effect is less prominent in larger transitional country cities. We also show that once we control for personal characteristics and income-related factors, we cannot reject the presence of a spatial equilibrium in life satisfaction. Our results indicate that each individual government that wishes to raise the life satisfaction of its residents still needs to boost those residents incomes in order to raise their subjective wellbeing. However, at least amongst developed countries, this practice results in an international Prisoners Dilemma in which mean life satisfaction stays stable despite rising global incomes.
Methane and Metrics: From global climate policy to the NZ farm
Authors:   Motu Economic and Public Policy Research, Dorner Zach , Kerr Suzi
Published: April 2018

Stroombergen and Reisingers (2012) modelling suggests global pricing of all greenhouse gas (GHG) emissions, including agricultural emissions, would be beneficial for the New Zealand economy, with higher GHG prices leading to greater economic benefit. Though this inference may seem counter-intuitive for a country in which agriculture is economically important, when the effects of GHG charges flow on to global commodity prices, the rise in global prices more than compensates NZ for the costs of our GHG emissions. These conclusions rest on a single set of models and several assumptions; however, the broad direction of the conclusions makes sense given the relatively low GHG emissions intensity of agriculture in NZ and the high importance of global commodity prices for NZs economic fortunes. In this paper we investigate the implications of Stroombergen and Reisingers (2012) results for a model NZ dairy and model NZ sheep and beef farm. We consider three climate policy scenarios that differ by whether agricultural emissions are included and priced globally, and in NZ. We find that NZ farmer interests generally align with NZs economic interests, though farmers are more greatly affected by differing international policy scenarios compared with the NZ economy as a whole. We find that the impact of the choice of metric (that is, how agricultural emissions are traded off against carbon dioxide emissions) is minor, especially when compared with the differences between international and domestic policy scenarios. On balance, our results suggest that long term, the best scenario for NZ and our farmers is to fully price global agricultural emissions within an international climate change agreement that allows NZ farmers to exploit their competitive advantage.
The effect of public funding on research output: the New Zealand Marsden Fund
Authors:   Motu Economic and Public Policy Research, Jaffe Adam , Gush Jason , Larsen Victoria , Laws Athene
Published: April 2018

We estimate the impact of participating in the NZ Marsden Fund on research output trajectories, by comparing the subsequent performance of funded researchers to those who submitted proposals but were not funded. We control for selection bias using the evaluations of the proposals generated by the grant selection process. We carry out the analysis in two data frames. First we consider the researcher teams behind 1263 second-round proposals submitted 2003-2008, and look at the post-proposal publication and citation performance of the team as a whole, as a function of pre-proposal performance, the ranking of the proposal by the panel, and the funding. This estimation does not deal with individual researchers multiple proposals and funding over time. To disentangle these effects, we consider the 1500 New Zealand researchers who appeared on any of these proposals, and estimate a model predicting annual individual performance as a function of previous performance, recent proposal activity, ranking of any recent proposals, and funding received through recent proposals. Overall, we find that funding is associated with a 6-15% increase in publications and a 22-26% increase in citation-weighted papers for research teams. For individuals, funding is associated with a 3-5% increase in annual publications, and a 5-8% increase in citation-weighted papers for 5 years after grant; however, the lag structure and persistence of this effect post-grant is difficult to pin down. Surprisingly, we find no systematic evidence that the evaluation of proposals by the Marsden system is predictive of subsequent success. We conclude that the Marsden Fund is modestly successful in increasing scientific performance, but that the selection process does not appear to be effective in discriminating among second-round proposals in terms of their likely success.
Agricultural productivity in New Zealand: First estimates from the Longitudinal Business Database
Authors:   Motu Economic and Public Policy Research, Apatov Eyal , Fabling Richard , Jaffe Adam , Morris Michele , Thirkettle Matt
Published: April 2018

Exports of dairy and sheep/beef products account for over 40% of New Zealand's aggregate merchandise exports. As a consequence, the performance of farms in these industries has a significant impact on the New Zealand economy. In this study, we link financial and agricultural data from the New Zealand Longitudinal Business Database (LBD) to estimate production functions of dairy and sheep/beef firms in New Zealand. Overall, we find that the data enables us to explain much of the industry-level variation in productivity and output, offering greater flexibility and insight than simply examining the official (aggregated) statistics. We find that variation in output can be largely explained by variation in capital, labour, intermediate expenditure, and productive land. We also find differences across industries in the way various farm practices (e.g. stocking rates, fertilizer use, supplementary activities, etc.) and area characteristics (including weather) relate to output. Finally, we find that estimating firm productivity at the industry level is less likely to accurately model the relationships for some sub-groups of firms (e.g. firms with different land size). We believe that our methodology could be useful for future studies addressing research questions relevant to this sector.
Indigenous Belief in a Just World: New Zealand M?ori and other Ethnicities Compared
Authors:   Motu Economic and Public Policy Research, Grimes Arthur , MacCulloch Robert , McKay Fraser
Published: April 2018

Survey evidence has revealed large differences in beliefs held by different cultures and ethnicities which may affect their economic prosperity. We study how the beliefs of New Zealands indigenous M?ori about the causes of wealth or poverty and the extent to which people are responsible for their own fate differ from non-M?ori using World Values Survey data from 1995 to 2011. M?ori are more likely to believe that (1) the poor have been unfairly treated and are not lazy; (2) a better life is due to luck and not hard work; (3) the Government is doing too little for those in need; and (4) business should not be run solely by the owners, compared to non-M?ori. We control for income, education and employment status, inter alia. The paper also compares differences between M?ori and non-M?ori within NZ to those between (non-indigenous) blacks and non-blacks within the US, as a benchmark. Stark results hold with respect to non-economic beliefs: whereas M?ori are 8.6% more likely to believe that the environment should be given priority over economic growth compared to non-M?ori, blacks are 20.5% less likely to hold this view compared to other Americans. Hence the evidence suggests that being indigenous plays a role in belief formation.
Production function estimation using New Zealands Longitudinal Business Database
Authors:   Motu Economic and Public Policy Research, Fabling Richard , Maré David
Published: April 2018

This paper is intended as a resource for researchers using the New Zealand Longitudinal Business Database (LBD) to study the productivity of New Zealand firms. First, it documents the methods used for creating a consistent dataset of production data, combining survey and administrative data sources. Second, it discusses a range of identification and estimation issues that arise when using the data for the estimation of multi-factor productivity. Finally, it demonstrates the value and usefulness of the data by presenting and comparing a range of productivity estimates for a single industry.
Predicting harvestability of existing Pinus radiata stands: 2013-2030 projections of stumpage profits from pre-90 and post-89 forests
Authors:   Motu Economic and Public Policy Research, Thirkettle Matt , Kerr Suzi
Published: April 2018

Our goal is to predict which forests are harvestable in New Zealand each year, and the stumpage profits attained from harvesting. We begin by documenting how Motu updates the 2008 Land Use in Rural New Zealand map to match the 2013 National Exotic Forest Description planted forest dataset. We then produce forest stand maps for the years 2013-2030. Last, we describe how we assign stumpage profits, and the distribution of stumpage profits over the simulation years (2013-2030). We find that stumpage profits are: always positive; increasing through time (2013-2030); lowest (on average) in the West Coast; and highest (on average) in the North Island East Coast. Our results suggest that forest owners will always harvest given that they have already incurred planting and growing costs. Limitations in data, including the need to use averages of yields and some costs across wide areas, and the effect of market conditions, and their role in determining the pace and average age at which the estate is harvested, mean that the true distribution of stumpage profits is likely to be wider. Those most likely to not harvest would be those with low estimated stumpage.
Addressing the absence of hours information in linked employer-employee data
Authors:   Motu Economic and Public Policy Research, Fabling Richard , Maré David
Published: April 2018

The availability of tax-based payroll data has proved a blessing to labour and business economists wishing to understand workers, their jobs and their employers. Unfortunately, administrative data do not always include key variables of interest. In the case of New Zealand, linked employer-employee data do not include any information on hours worked. We implement a set of complementary methods to patch this gap, deriving an approximate measure of full-time equivalent labour input. In addition, and more specific to the New Zealand data environment, we describe a method for identifying working proprietors using annual tax-filed information, thus providing a more complete picture of total firm labour input.
Firm Productivity Growth and Skill
Authors:   Motu Economic and Public Policy Research, Maré David , Hyslop Dean , Fabling Richard
Published: April 2018

This paper examines the relationship between firm multifactor productivity growth (mfp) and changing skill levels of labour in New Zealand, over the period 2001-12, using longitudinal data from Statistics New Zealands Longitudinal Business Database (LBD) and Integrated Data Infrastructure (IDI). We estimate that the average skill of workers declined by 1.8% over the period, reflecting strong employment growth for workers with lower than average skill levels. The net decline was the combined effect of a 3.6% decline in unobserved skill outweighing a 1.8% increase in observed skill, resulting in 1.8% slower estimated skill-adjusted labour growth (13.3%) than the 15.0% growth in full-time equivalent (FTE) employment. Mirroring the skill-dilution, skill-adjusted mfp growth averaged 0.24% per annum over the period compared to 0.14% pa for unadjusted growth. The patterns were stronger over the pre-GFC period to 2008, during which adjusted and unadjusted mfp grew 0.57% pa and 0.42% pa respectively. Our analysis of the effect of changing skill on mfp growth finds that the impact of skill adjustment was almost entirely due to changing skill composition within continuing firms.
Before a Fall: Impacts of Earthquake Regulation and Building Codes on the Commercial Building Market
Authors:   Motu Economic and Public Policy Research, Timar Levente , Grimes Arthur , Fabling Richard
Published: April 2018

We test whether a major earthquake in one city (Christchurch, New Zealand) affects the prices of earthquake-prone commercial buildings in a city (Wellington) that was unaffected by the disaster. In particular, we test whether the official public declaration of a building as being earthquake-prone (with a corresponding requirement to remediate the building to minimum earthquake code requirements) has an effect on price over and above that experienced by similarly earthquake-prone (but not yet declared) buildings. We distinguish the latter by isolating sales of those buildings that are subsequently declared to be earthquake-prone. We find that in the CBD, the price discount that accompanies an official earthquake-prone declaration averages 45% whereas there is no observable discount on buildings that are subsequently declared earthquake-prone. Consistent with our theoretical model that anticipates forced sale of some officially declared earthquake-prone buildings, the probability of sale of officially declared earthquake-prone buildings rose markedly after the Christchurch earthquakes. Our results therefore show that officially declared earthquake-prone status has a considerable impact on the commercial property market that is separate from the effects of being earthquake-prone but where the building has not (yet) officially received that status.
Residential Assimilation of Immigrants: A Cohort Approach
Authors:   Motu Economic and Public Policy Research, Maré David , Pinkerton Ruth , Poot Jacques
Published: April 2018

This paper measures the process of residential assimilation for three cohorts of immigrants from each of five countries of birth entering Auckland, New Zealand between 1991 and 2006. It tracks, and compares, the changes in spatial segregation, isolation, and autocorrelation for these cohorts over time, using index measures adjusted for random location variation. We find evidence of residential assimilation, whereby immigrants become less spatially concentrated in the years following arrival. Overall concentration has nevertheless been increasing over time, with successive cohorts entering with higher levels of initial concentration. By examining the spatial location patterns of arrival cohorts, we show that entering cohorts are attracted to the current rather than initial locations occupied by the previous cohort of their compatriots. Despite differences across cohorts and over time, there is nevertheless a high degree of stability in the residential footprint of different immigrant groups within Auckland.
The specification of dynamic discrete-time two-state panel data models
Authors:   Motu Economic and Public Policy Research, Gørgens Tue , Hyslop Dean
Published: April 2018

This paper examines dynamic binary response and multi-spell duration model approaches to analyzing longitudinal discrete-time binary outcomes. Prototypical dynamic binary response models specify low-order Markovian state dependence and restrict the effects of observed and unobserved heterogeneity on the probability of transitioning into and out of a state to have the same magnitude and opposite signs. In contrast, multi-spell duration models typically allow for state-specific duration dependence, and allow the probability of entry into and exit from a state to vary flexibly. We show that both of these approaches are special cases within a general framework. We compare specific dynamic binary response and multi-spell duration models empirically using a case study of poverty transitions. In this example, both the specification of state dependence and the restrictions on the state-specific transition probabilities imposed by the simpler dynamic binary response models are severely rejected against the more flexible multi-spell duration models. Consistent with recent literature, we conclude that the standard dynamic binary response model is unacceptably restrictive in this context.
Can happiness data help evaluate economic policies?
Authors:   Motu Economic and Public Policy Research, MacCulloch Robert
Published: April 2018

Imagine a government confronted with a controversial policy question, like whether it should cut the level of unemployment benefits. Will social welfare rise as a result? Will some groups be winners and other groups be losers? Will the welfare gap between the employed and unemployed increase? Happiness data offer a new way to make these kinds of evaluations. These data allow us to track the well-being of the whole population, and also sub-groups like the employed and unemployed people, and correlate the results with relevant policy changes.
A Rough Guide to New Zealand's Longitudinal Business Database (2nd edition)
Authors:   Motu Economic and Public Policy Research, Fabling Richard , Sanderson Lynda
Published: April 2018

New Zealand's Longitudinal Business Database is a rich resource for understanding the behaviour of New Zealand firms. This paper provides an introductory guide to the content and structure of the data aimed at new and prospective users. Where relevant, it references other publications which provide greater detail on particular aspects of the data. It also briefly describes access protocols for researchers, and processes for updating and expanding the database.
Two Countries, Sixteen Cities, Five Thousand Kilometres: How Many Housing Markets?
Authors:   Motu Economic and Public Policy Research, Greenaway-McGrevy Ryan , Grimes Arthur , Holmes Mark
Published: April 2018

We test whether a single housing market exists across sixteen cities covering two countries, Australia and New Zealand. Distances between these cities are vastly greater than commuting distances. We define a single housing market as one in which a single stochastic trend describes the long run path of real house prices in all cities. A strong form single housing market occurs when an innovation to the stochastic trend affects house prices across all cities multiplicatively to an equal degree. A weak form occurs when an innovation to the stochastic trend affects house prices in all cities, but not to an equal degree. We find that the sixteen housing markets are characterised by a weak form single housing market. The dynamic structure of adjustment reveals three groups of cities. House price shocks are first reflected in the price dynamics of a leading group of Australian cities (including Melbourne and Sydney), then flow to a group of follower cities comprising peripheral Australian and major New Zealand cities, and then to a group of laggard cities within New Zealand. Our theoretical model demonstrates how a weak form single housing market may arise due to differences between cities in house price responses to land prices, migration responses to house prices and/or land price responses to migration flows.
Subjective wellbeing impacts of national and subnational fiscal policies
Authors:   Motu Economic and Public Policy Research, Grimes Arthur , Ormsby Judd , Robinson Anna , Yuat Wong Siu
Published: April 2018

We study the association between fiscal policy and subjective wellbeing using fiscal data on 35 countries and 130 country-years, combined with over 170,000 peoples subjective wellbeing scores. While past research has found that distortionary taxes (e.g. income taxes) are associated with slow growth relative to non-distortionary taxes (GST/VAT), we find that distortionary taxes are associated with higher levels of subjective wellbeing than non-distortionary taxes. This relationship holds when we control for macro-economic variables and country fixed effects. If this relationship is causal, it would offer an explanation as to why governments pursue these policies even when they harm economic growth. We find that richer peoples subjective wellbeing is less harmed by indirect taxes than for people with lower incomes, while unproductive expenditure is associated with higher wellbeing for the middle class relative to others, possibly reflecting middle class capture. We see little evidence for differential effects of fiscal policy on people living in different sized settlements. Devolving a portion of expenditure to subnational government is associated with higher subjective wellbeing but devolving tax collection to subnational government is associated with monotonically lower subjective wellbeing.
Lessons Learned from the New Zealand Emissions Trading Scheme
Authors:   Motu Economic and Public Policy Research, Leining Catherine , Kerr Suzi
Published: April 2018

The New Zealand Emissions Trading Scheme (NZ ETS) is the New Zealand governments cornerstone policy instrument for meeting New Zealands climate change responsibilities. The New Zealand system was designed based on strong linkages to international carbon markets. Understanding how these have affected the New Zealand market is critical both for policymakers in New Zealand and designers of international emissions trading schemes who are considering linkages. We adapt Pizer and Yates' 2013 model of a linked tradable permit systems to conditions in the NZ ETS. We compare the model with price and surrender data and find that the international linkage works as expected. When New Zealand is a buyer of units and linking is certain, NZU prices are roughly equal to the Kyoto unit price. When the New Zealand government announces that New Zealand will de-link  no longer allowing any international units  prices diverge and New Zealand participants meet almost all current obligations with Kyoto units, saving their NZUs for the delinked future.
Labour market dynamics following a regional disaster
Authors:   Motu Economic and Public Policy Research, Fabling Richard , Grimes Arthur , Timar Levante
Published: April 2018

The 2010/2011 Canterbury earthquakes caused major upheaval to the people of the region. The second major quake killed 185 people, forced many from their homes, and closed Christchurchs central business district. This paper examines the consequential effect on jobs and accumulated earnings for workers in Canterbury. In addition, we examine concurrent decisions about employment location, including job-to-job transitions and regional migration. While Canterbury workers employment outcomes were adversely affected in the short-run, those workers were more likely to have jobs three years later (relative to a matched control group), and to have higher accumulated earnings. At the same time, they were less likely to be at the same employer, and more likely to have migrated to jobs in other New Zealand regions. Impacts vary substantially by worker characteristics and by the naturally-induced geographic variation in the severity of the shock. We show that the Earthquake Support Subsidy appears to have influenced the extent of outward migration decisions, at least for most types of workers, though not the long-term retention of the pre-quake job under which the subsidy was gained. We interpret these findings as evidence that the subsidy achieved its goal of delaying involuntary job loss and, as a result, fewer workers made immediate decisions to leave the region  decisions that persisted over the long-run.
Productivity distribution and drivers of productivity growth in the construction sector
Authors:   Motu Economic and Public Policy Research, Jaffe Adam , Le Trinh , Chappell Nathan
Published: April 2018

This study draws on firm-level data from the Longitudinal Business Database to examine productivity in the New Zealand construction industry. It finds that over the period 20012012, on average labour productivity in this industry grew by 1.7 percent annually and multi-factor productivity by 0.5 percent annually, compared with 0.5 and 0.1 percent annually respectively for firms in the overall measured sector. Within the construction industry, productivity growth rates vary markedly by sub-industry and other firm characteristics. Labour productivity is more widely dispersed across the construction industry than is multi-factor productivity. High-productivity firms tend to be younger, more likely to be a new start-up, to belong to a business group, and to locate in Auckland than low-productivity firms. Working-proprietor-only firms are slightly less productive on average than employing firms, and also exhibit much greater productivity variation. Overall, however, productivity variation or dispersion is no greater in construction than in other industries. We decompose productivity changes over time into that due to changes at continuing firms, to reallocation of output from low- to high-productivity firms, and to entry and exit. In the Building construction and Heavy and civil engineering and construction industries, productivity was enhanced by net entry and reallocation, but reduced by an overall decline in the productivity of continuing firms. In the Construction services industry, net entry, reallocation, and productivity improvement of continuing firms all contributed to positive productivity growth.
Does money grow on trees? Mitigation under climate policy in a heterogeneous sheep-beef sector
Authors:   Motu Economic and Public Policy Research, Timar Levente
Published: April 2018

I use simulations from the Land Use in Rural New Zealand model to consider mitigation for different classes of sheep-beef farms under climate policy. Farmers in the model can respond to carbon prices by abandoning or afforesting marginal land. In assessing carbon credits against liabilities, I consider only the income a farmer would be able to get with certainty without taking a carbon price risk. Farmers in intensive farm classes tend to bear the costs of emissions because their opportunity cost of exiting pastoral agriculture is high. The dominant land-use response in more extensive systems is land abandonment or afforestation, depending on location. Less profitable farm classes generally face higher average liabilities in relation to profits, both before and after the land-use response. Results indicate that farmers in North Island hill country may benefit most from afforestation opportunities. In this farm class, income from rewards could offset over half of farmers emission liabilities.
The Effect of Trial Periods in Employment on Firm Hiring Behaviour
Authors:   Motu Economic and Public Policy Research, Chappell Nathan , Sin Isabelle
Published: April 2018

An amendment to legislation in 2009 enabled New Zealand firms with fewer than 20 employees to hire new workers on trial periods. The scheme was subsequently extended to employers of all sizes. The policy was intended to encourage firms to take on more employees, and particularly more disadvantaged job seekers, by reducing the risk associated with hiring an unknown worker. We use unit record linked employer-employee data and the staggered introduction of the policy for firms of different sizes to assess the policy effect on firm hiring behaviour. We find no evidence that the policy affected the number of hires by firms on average, either overall or into employment that lasted beyond the trial period. We also do not find an effect on hiring of disadvantaged jobseekers. However, our results suggest that the policy increased hiring in industries with high use of trial periods by 10.3 percent.