Policy Article

More jobs for New Zealand? Employment effects of labor market reforms (original publication German only)

Die Weltwirtschaft, 1999 (1): 111–135

Following the drastic labour market reforms of 1991 the New Zealand labour market development was characterized by a pronounced drop of the unemployment rate. These reforms were part of a transformation process which affected the economic system as a whole: since 1984 the New Zealand economy had been deregulated, privatized and reintegrated in the international division of labour. To counter growing structural unemployment labour market flexibility was increased by the decentralization of the wage finding system. As a consequence of this reform the wage finding process was not longer determined by a cartel consisting of government, trade unions and employers federation. Under the new system wages could follow the development of enterprise productivity and a higher degree of wage differentiation became possible. The analysis of the employment structures reveals that the increase of part-time employment, especially of women, together with a growing share of service sector activities contributed decisively to the positive labour market performance in New Zealand. Moreover it is discussed if guidelines could be derived from the New Zealand reform approach which might help to solve the German labour market problems.

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