New papers on work outcomes, funding conditions and wage gap

New papers on work outcomes, funding conditions and ethnic wage gaps

The Treasury has published two Working Papers and an Analytical Paper today, covering New Zealand funding conditions, labour market outcomes and ethnic wage gaps.

The following papers are available on the Treasury website:

• The Impact of Tertiary Study on the Labour Market Outcomes of Low-qualified School Leavers: An Update (Working Paper 2018/03) by Sarah Tumen, Sylvia Dixon and Sarah Crichton. This paper assesses the impacts of post-school education on the labour market outcomes of people aged between 15 and 21. Specifically, the authors sample school-leavers who did not complete NCEA level 2, but who then subsequently enrolled at a tertiary institution. The authors find that while completing tertiary qualification improves employment prospects, no significant evidence is found between tertiary education and higher subsequent earnings.

• US Monetary Policy, Global Risk Aversion, and New Zealand Funding Conditions (Working Paper 2018/04) by Eric Tong. This paper looks into the impact of US monetary tightening on New Zealand funding conditions. Using a statistical framework that tracks the interrelations among real and financial variables between the US and New Zealand, the author finds that increase in the US one-year rate leads to increases in domestic and external funding spreads of New Zealand banks respectively. Similar patterns are documented in Australia, Canada, Sweden and United Kingdom. These results suggest the existence of a global financial cycle underpinned by US monetary policy.

• Statistical Analysis of Ethnic Wage Gaps in New Zealand (Analytical Paper 2018/03) by the Treasury’s Analytics and Insights team. The paper estimates the contribution of various personal attributes to New Zealand’s ethnic wage gaps. Analysing the 2016-17 data from the Household Labour Force Survey, the authors find that educational level and occupation are the two factors that have the largest impact on Māori-Pākehā and Pacific-Pākehā wage disparities. This implies that reducing ethnic differences in educational attainment and/or occupational status could help to reduce the size of the aggregate wage disparities. The results are relevant for He kai kei aku ringa, the previous Government’s Māori economic development strategy.

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