People like to be dry and sunny, by the sea, but firms like cities.
We analyse which factors attract people and firms (and hence jobs) to different settlements across New Zealand. Using theoretically consistent measures derived within the urban economics literature, we compile quality of life and quality of business indicators for 130 ‘cities’ (settlements) from 1976 to 2013, using census rent and wage data. Our analyses both include and exclude the three largest cities (Auckland, Wellington, Christchurch). Places that are attractive to live in tend to be sunny, dry and near water (i.e. the sea or a lake). Since the mid-1990s, attractive places have also had relatively high shares of the workforce engaged in education and (to a lesser extent) health. Attractive places have high employment shares in the food, accommodation, arts and recreation service sectors; however (unlike for education and health) we find no evidence that quality of life is related to changes in employment share for these sectors. The quality of business is highest in larger cities, and this relationship is especially strong when the country’s three largest cities are included in the analysis.