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by James Newell and Kerry L. Papps

Identifying functional labour markets in New Zealand : A reconnaissance study using travel-to-work data. by James Newell and Kerry L. Papps Labour Market Policy Group, Department of Labour and Monitoring and Evaluation Research Associates (MERA). Objective.

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by James Newell and Kerry L. Papps

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  1. Identifying functional labour markets in New Zealand : A reconnaissance study using travel-to-work data by James Newell and Kerry L. Papps Labour Market Policy Group, Department of Labour and Monitoring and Evaluation Research Associates (MERA) A Reconnaissance Study of New Zealand Functional Labour Market Areas PANZ 2001 Conference, 28 June 2001

  2. Objective • This paper derives a preliminary classification of New Zealand into local labour market areas using area unit travel-to-work data from the 1991 Census. • Travel-to-work data record the location of residence and the location of employment of individuals and therefore provide some information about commuting patterns. • These can be used to form local labour markets that meet predetermined criteria. A Reconnaissance Study of New Zealand Functional Labour Market Areas PANZ 2001 Conference, 28 June 2001

  3. Background - Origins • Department of Labour scoping study on regional migration and labour markets (Newell (2001)) saw as a prerequisite: • “identification of functional labour market areas as a framework for the serious study of migration and labour market interactions” • MERA search for functionally meaningful sub-national spatial frameworks for studying local social and economic development processes • Increase in the amount of research on sub-national migration in New Zealand. • This work needs some definition of what constitutes a labour market, e.g. Maré and Choy (2001). A Reconnaissance Study of New Zealand Functional Labour Market Areas PANZ 2001 Conference, 28 June 2001

  4. Background - Applications • Looking at local development on a functionally-defined labour market area basis should help in : • the assessment of the effectiveness of regional development policies • the “vulnerability” of areas to particular types of labour market events or trends. • Offers a more easily replicable and standardisable spatial framework for comparisons of “regional” inequality across countries (if an existing approach taken). A Reconnaissance Study of New Zealand Functional Labour Market Areas PANZ 2001 Conference, 28 June 2001

  5. Six criteria of Coombes et al. (1986) • Any regionalisation method should ensure that, in approximate order of importance, travel-to-work areas: • are sufficiently self-contained in terms of commuting flows; • have statistical viability in terms of stated definitional requirements of travel-to-work area size and self-containment; • are geographically reasonable across the whole country; • have been consistently defined from the same procedure; • achieve the maximum level of detail (i.e. produce as many travel-to-work areas as possible); • are based on a method derived from labour market theory. A Reconnaissance Study of New Zealand Functional Labour Market Areas PANZ 2001 Conference, 28 June 2001

  6. Previous work : Three approaches to “regionalisation” outlined by Coombes (1996): • 1. Manual methods : links populous cities with their environs on the basis of commuting flows etc., however they are not geographically exhaustive, e.g. United States Metropolitan Area system • 2. Statistical methods : single procedure that aims to maximise criterion representing objectives, however they are devoid of labour market theory, e.g. INTRAMAX procedure • 3. “Hybrid” approach: based on theory while still using multi-step statistical methods, e.g. Coombes (1986): • We have taken the third approach. A Reconnaissance Study of New Zealand Functional Labour Market Areas PANZ 2001 Conference, 28 June 2001

  7. Basic Method • 1. Select spatial units for the analysis (area units) • 2. Identify “primary” foci for the “regions” • 3. Progressively amalgamate the primary foci into clusters which meet minimum viability criteria • 4. Progressively assemble “proto” local labour market areas by grouping non-foci with foci clusters. • 5. Rationalise the proto LLMA clusters eliminating those that don’t meet viability criteria A Reconnaissance Study of New Zealand Functional Labour Market Areas PANZ 2001 Conference, 28 June 2001

  8. 2. Identify “primary” foci for the “regions” • Criteria for inclusion as a focus for LLMA assembly - individual primary spatial units • meet the “job ratio” ratio criteria - ratio of locally based jobs to locally resident employed workers • Meet residential (supply side - outward trip generators) self containment limits • "Noise" filters - minimum population or workplace employment numbers A Reconnaissance Study of New Zealand Functional Labour Market Areas PANZ 2001 Conference, 28 June 2001

  9. 3A. Progressively amalgamate the primary foci into clusters • Primary "foci" are ranked on the number of commuting inflows • In rank order, stepwise forced amalgamation until the current “focus cluster” meets minimum viability criteria • Viability criteria - residential and workplace self containment of the candidate “focus cluster” both reach a minimum level • Focus amalgamation criteria - merger of current and best matched of those possible merger partners based on “weighted interaction index” score A Reconnaissance Study of New Zealand Functional Labour Market Areas PANZ 2001 Conference, 28 June 2001

  10. 3B. Progressively amalgamate the primary foci into clusters • Higher ranked focus absorbs lower ranked focus • Each “focus cluster” continues to amalgamate with other focus clusters until it is either • absorbed by another higher ranked focus, • achieves minimum viability, or • exhausts all amalgamation candidates which meet the minimum “weighted interaction index” score A Reconnaissance Study of New Zealand Functional Labour Market Areas PANZ 2001 Conference, 28 June 2001

  11. Formation of LLMAs’ from foci clusters” and non-foci spatial units • 4. Assemble "proto-LLMAs’ by progressively grouping non-focus spatial units with foci clusters” • seeks further amalgamation of “focus clusters” • starts amalgamation of non-focus units with “focus clusters” • 5. Allocate residual AU’s to proto LLMA’s • Find best find for as yet unmatched AU’s • 6. Weed out those proto LLMA’s which don’t meet viability criteria - and reallocate spatial units to other proto-LLMAs A Reconnaissance Study of New Zealand Functional Labour Market Areas PANZ 2001 Conference, 28 June 2001

  12. Translating and Implementing the Algorithm • 1991 Area Unit building blocks - fixed • “Prime” Foci - fixed • Foci “clusters” -Amalgamated foci - floating / not fixed • Proto-LLMA’s - floating / not fixed A Reconnaissance Study of New Zealand Functional Labour Market Areas PANZ 2001 Conference, 28 June 2001

  13. Results - Sorting Process • 1716 1991 Area Units • 564 Primary Foci • ? “Foci Clusters” (prev method 210 clusters) • “Proto foci” A Reconnaissance Study of New Zealand Functional Labour Market Areas PANZ 2001 Conference, 28 June 2001

  14. Results sought - “Local Labour Market Areas” (LLMA’s) • Self-containment of proto LLMA’s • LLMA Internal Consistency • Comparison with existing local authority and regonal boundaries for selected Regions • Basic Historical Labour Market / Demographic Attributes of LLMA’s A Reconnaissance Study of New Zealand Functional Labour Market Areas PANZ 2001 Conference, 28 June 2001

  15. Other work still to do on this project • Sensitivity analysis • test robustness of classification with respect to self-containment level and population size criteria. • Assemble preliminary local labour market area statistical series • derive from existing area unit level statistical data • local employment and labour market history • “Community”, Population and migration history . A Reconnaissance Study of New Zealand Functional Labour Market Areas PANZ 2001 Conference, 28 June 2001

  16. Implications of this project - Potential applications for this work • To provide an initial “working draft“ spatial unit of analysis for studies of local development and migration. • To produce estimates of local migration (and other) rates for regions on a (roughly) internationally-consistent basis. • To provide a framework for assessing the interaction between changes in local labour markets and local communities / populations • To identify “vulnerable” labour markets, i.e. those with a heavy reliance on one industry and a high proportion of low-skill workers. A Reconnaissance Study of New Zealand Functional Labour Market Areas PANZ 2001 Conference, 28 June 2001

  17. Directions for future work • Extension to dynamic framework - 1976-2001 Census Time harmonised spatial framework of successive travel-to-work data (constraints of the Small Domain Release Policy). • Comparison of results to obtain information about dynamic nature of local labour markets. • Explore differences in local labour market areas across subgroups, e.g. age, gender, ethnicity, education level. (Papps (2000) - migration differences) • Apply to local/regional case studies and projects • Improvements in the method used to make it more applicable to New Zealand, e.g. work of de Vries and Morrison. A Reconnaissance Study of New Zealand Functional Labour Market Areas PANZ 2001 Conference, 28 June 2001

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