Productivity as a determinant of labour wage in New Zealand’s construction sector

• Main Authors: Mustafa Ozturk, Serdar Durdyev, Osman Nuri Aras, Audrius Banaitis
• Format: Article
• Language: English
• Published: Vilnius Gediminas Technical University 2019-06-01
• Series: Technological and Economic Development of Economy
• Subjects: productivity; labour wage; New Zealand; construction; panel data analysis; unemployment
• Online Access: https://www.tede.vgtu.lt/index.php/TEDE/article/view/10297

The empirical relationships between labour wages, unemployment rate and the labour productivity index in New Zealand’s construction sector (for the period of 1983–2017) were investigated. The Johansen cointegration test and vector error correction mechanism were used to determine the existence of long-run relationships between the variables and the adjustment process of the short-run disequilibrium into the long-run equilibrium. The results show that the labour productivity index positively affects the labour wage, while the effect of unemployment rate is negative in the long run. That is, the more productive the labour, the more the wages earned. Related statistical tests on the residuals proved that the model and its findings are reliable.