Targeting Families' Assistance: Evaluating Family and Employment Tax Credits in New Zealand's Tax-Benefit System

<p>In 2004 the Labour-led government announced a series of tax-benefit reforms (the Working for Families reforms) that will account for an estimated $1.17 billion per-annum of new spending when fully implemented by 1 April 2007. These reforms aim to both reduce rates of child poverty and improve financial incentives for paid work at low wages, particularly for caregivers. Changes to family and employment tax credits (the Family Assistance programmes) are central to these reforms. This study reviews methods for measuring the effectiveness of family and employment tax credits, evaluates the Working for Families reforms, and considers possible improvements to Working for Families. Questions that this study considers are: What roles should family and employment tax credits play in tax-benefit systems? How should family and employment tax credits be designed? Should eligibility for assistance reflect work effort as opposed to family structure? What lessons do historical and comparative perspectives on Working for Families provide? Will New Zealand's Working for Families reforms achieve the optimal design and role of family and employment tax credits? What improvements, if any, could be made to the Working for Families reforms? This study concludes that the Working for Families reforms represent significant income redistribution towards families with children but little change will be made to the overall design of the Family Assistance programmes, some of which have remained largely unchanged since 1986. Working for Families does not fully address the need to reform the Family Assistance programmes in the light of important social and economic changes that have taken place over the last two decades, such as the breakdown of the breadwinner model of social arrangements and the liberalisation of the labour market. This study thus considers a number of improvements to Working for Families, ranging from simplifying the structure of the Family Assistance Tax Credits to a more radical redesign of these programmes. This study concludes that more clearly established policy priorities and a greater understanding of the relative effectiveness of different tax-benefit instruments are required if New Zealand is to develop a tax-benefit system that achieves a desired level of redistribution to families with children at least economic cost.</p>

Targeting Families' Assistance: Evaluating Family and Employment Tax Credits in New Zealand's Tax-Benefit System

<p>In 2004 the Labour-led government announced a series of tax-benefit reforms (the Working for Families reforms) that will account for an estimated $1.17 billion per-annum of new spending when fully implemented by 1 April 2007. These reforms aim to both reduce rates of child poverty and improve financial incentives for paid work at low wages, particularly for caregivers. Changes to family and employment tax credits (the Family Assistance programmes) are central to these reforms. This study reviews methods for measuring the effectiveness of family and employment tax credits, evaluates the Working for Families reforms, and considers possible improvements to Working for Families. Questions that this study considers are: What roles should family and employment tax credits play in tax-benefit systems? How should family and employment tax credits be designed? Should eligibility for assistance reflect work effort as opposed to family structure? What lessons do historical and comparative perspectives on Working for Families provide? Will New Zealand's Working for Families reforms achieve the optimal design and role of family and employment tax credits? What improvements, if any, could be made to the Working for Families reforms? This study concludes that the Working for Families reforms represent significant income redistribution towards families with children but little change will be made to the overall design of the Family Assistance programmes, some of which have remained largely unchanged since 1986. Working for Families does not fully address the need to reform the Family Assistance programmes in the light of important social and economic changes that have taken place over the last two decades, such as the breakdown of the breadwinner model of social arrangements and the liberalisation of the labour market. This study thus considers a number of improvements to Working for Families, ranging from simplifying the structure of the Family Assistance Tax Credits to a more radical redesign of these programmes. This study concludes that more clearly established policy priorities and a greater understanding of the relative effectiveness of different tax-benefit instruments are required if New Zealand is to develop a tax-benefit system that achieves a desired level of redistribution to families with children at least economic cost.</p>

Isplativost rada u Hrvatskoj i Sloveniji: analiza pomoću mikrosimulacijskog modela

WORK INCENTIVES IN CROATIA AND SLOVENIA: ANALYSIS USING MICROSIMULATION MODELS The paper analyzes the impact of the tax-benefit system on work incentives in Croatia and Slovenia. Unemployed and inactive persons and their hypothetical transitions to employment are considered. As the main indicator of work incentives, the participation tax rate (PTR) is estimated, as it represents a portion of additional income that is lost because taxes increase and benefits decrease in transition of a person from non-employment into employment. Unlike previous research, which was made for both countries on hypothetical data, in this paper for the first time the calculations and analysis of PTR are based on survey data, which for both countries gives a realistic picture of the situation in the field of work incentives. The analysis is carried out on data and the tax-benefit system for 2017, and the main tool used is EUROMOD, a tax-benefit microsimulation model for the EU countries. The results show that the average PTR in Croatia is of a moderate size of 31.3%, while in Slovenia it is 11.3 percentage points higher. People with higher number of dependent children and those with lower level of market income obtained by other household members are more likely to have a high PTR in both countries, and in Croatia people with only primary education will also have it. Key words: participation tax rate, work incentives, EUROMOD, Croatia, Slovenia

Can Computers Automate Welfare?

Information-driven automated systems that deliver services proactively to citizens in need are heralded as the next level of digital government. There is, however, concern that such systems make welfare services less accessible to some citizens. This study uses the case of Norway’s child benefit system to discuss the general obstacles to having welfare policies implemented by proactive digital systems. Norway’s automated child benefit system uses data from Norway’s national resident register to award this benefit to eligible parents whom the system identifies. As such, it is representative of many government systems that use registry data to perform tasks previously done by caseworkers. While the eligibility rules for child benefits are simple, and the register has sufficient data to automate most cases, many parents are not awarded the benefit automatically. This article argues that when developing automated digital services, public administrators are faced with a trilemma. Ideally, proactive automation should be (1) precise in its delivery, (2) inclusive of all citizens, and (3) still support welfare-oriented policies that are independent of the requirements of the digital system. However, limitations with each requirement prevent all three from being realized at the same time. Only two can be simultaneously realized: a public administrator must decide which of them to forego. Consequently, automated services cannot meet all the expectations of policymakers regarding the benefits of digital government. Instead, governments need to find ways of utilizing the benefits of public digitalisation without infringing on citizens’ right to be treated equally and fairly by the government.

From Substitutive to Supplementary: Institutional Interplay between Public and Occupational Sickness Benefits in Finland, 1947-2016

In the context of the Finnish welfare state, this article examines the role of occupational welfare in the interplay between public and occupational sickness benefits from 1947 to 2016, to analyse how the two sickness benefits have interacted over time and the role occupational welfare has played in sickness provision. Previous research has noted that occupational benefits may support or compensate for the much-debated declining welfare state. Hence, it is important to acquire greater knowledge about the public-occupational interplay. The study uses in-depth individual-level analysis from a retrospective point of view, which has been rare in previous research, and examines the public-occupational interplay in the Finnish sickness benefit system from the first national collective agreements to 2016. Based on the reforms made to the public system, the article identifies and utilises six different phases of the Finnish sickness allowance system in the main analysis. The institutional development of sickness provision is investigated by analysing the compensation rate and benefit period, using metalworkers as a representative example of blue-collar workers. The results indicate that occupational benefits are strongly institutionalised in the Finnish sickness benefit system. The interplay between statutory and occupational sickness benefits has taken different forms over time, and occupational benefits have been re-negotiated as the statutory system has been reformed. The article provides valuable information on the historical development and relevance of occupational welfare, in terms of not only understanding its significance for individuals but also comprehending the logic of the interplay in the public-private mix of welfare provision.

Extending the Scope of ALM to Social Investment: Investing in Population Growth to Enhance Sustainability of the Korean National Pension Service

The Korean National Pension Service (NPS) is a partially funded and defined-benefit system. Although the accumulated Fund of the NPS has been increased gradually, this large fund is concerned about depletion in the near future due to the unprecedented aging population and the low fertility rate. In this study, we have developed an asset-liability management (ALM) model that endogenizes variables which were regarded as being exogenous by including them in investable assets. We present the multistage stochastic programming (MSP) formulation incorporating the population structure as a variable that is new to ALM. The optimal portfolio encompassing the investment in raising the fertility rate is obtained. Extending the scope of ALM to social investment is a new approach that has not been attempted in other ALM studies. We demonstrate that socially driven investments can also be a good investment asset in which the NPS should consider to invest.