Researchers to look at impact of economic shocks

MEDIA RELEASE

10 September 2007

Waikato researchers to investigate impact of economic shocks and home ownership

When a person is made redundant or suddenly takes ill, it can have a huge effect on the well-being of a family. People have to change their spending, saving and employment habits and plans.

Just how big an impact an economic shock can have is the focus of a new study by Motu Research and the University of Waikato Management School’s Professor John Gibson. A Motu-led team of Steven Stillman, Dave Maré and Gibson has been awarded a $600,000 Marsden Grant to research the impact of economic shocks on the well-being of New Zealanders.

“The sort of shocks we’re looking at would include unexpected job loss or change, wage shocks and health changes ” says Professor Gibson. “Any change in circumstance in a household that can alter their earning capacity and therefore alter their future plans.”

The study will use data from the new Survey of Family, Income and Employment (SoFIE) to do four different analyses of economic shocks. The first will look at the characteristics of individuals prone to economic shocks, the second will examine the impact of these shocks on their employment status, wages and income, the third will look at how the shocks affect other household members such as teenagers making the transition from school to work and the fourth will look at the impact on household composition and wealth.

Professor Gibson says this research may provide evidence to policy makers on the adequacy of social safety nets and help determine ways to reduce the impact of changes in economic circumstances on individual and household well-being.

Housing will come under the spotlight in a second Marsden Grant awarded to Motu. Led by Dr Arthur Grimes, an adjunct professor at Waikato Management School with Dr Steven Stillman from Motu and Dr Bonggeun Kim from Waikato, this research will see if in fact homeowners do make better citizens than people who rent.

This research will also use SoFIE and Statistics NZ data to investigate the true trends in homeownership trends, the characteristics of home owners and the impact that owning a home has on the labour market, health, wealth and education status of homeowners and their families and on the quality of surrounding neighbourhoods.

“A lot of this research is going to be possible because we’re now getting micro information from Statistics New Zealand which we’ve not had access to before. It would be impossible to do such research without this,” says Professor Gibson.

ENDS

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