The Long-Run Impact of New Zealand’s Structural Reform on Local Communities

New Zealand underwent a period of comprehensive market-oriented economic reforms from 1984-93.

In this paper, we use data from the 1986, 1991, 1996 and 2001 Censuses to examine the long-run impact that these reforms had on local communities. We analyse the adjustment process in 140 local labour market areas (LMAs) by creating three measures of the impact of structural reform on local communities - an employment-based measure, a population measure and a housing price measure - and examine the persistence of these shocks over time.

We find that communities which experienced smaller employment shocks have higher employment rates, higher average incomes and a more skilled workforce in the medium and long-term. Population shocks also have positive, sizeable and persistent effect on average incomes and population in the future.

Overall, the initial impacts of the reforms undertaken in New Zealand on local communities appear to still endure more than a decade later.