Mandatory Savings: The Saviour of New Zealand'S Welfare State
In: The University of Auckland Business School Research Paper Series, Forthcoming
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In: The University of Auckland Business School Research Paper Series, Forthcoming
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In: The Handbook of Well-being, edited by Ed Diener, Shige Oishi and Louis Tay, Forthcoming
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Imagine a government confronted with a controversial policy question, like whether it should cut the level of unemployment benefits. Will social welfare rise as a result? Will some groups be winners and other groups be losers? Will the welfare gap between the employed and unemployed increase? "Happiness data" offer a new way to make these kinds of evaluations. These data allow us to track the well-being of the whole population, and also sub-groups like the employed and unemployed people, and correlate the results with relevant policy changes.
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In: IZA world of labor: evidence-based policy making
In: American journal of political science, Volume 48, Issue 4, p. 830-848
ISSN: 1540-5907
The question of how the level of development affects revolutionary support in society is of fundamental importance. One approach to provide an answer has been to study the relationship between actual civil conflict and income at the national level. This article takes a different approach. It uses microdata sets based on surveys of revolutionary support across one‐quarter of a million people and identifies how the responses vary with their incomes. We find that a rise in GDP of $US 1,600 per capita in 2001 values decreases the chances of supporting revolt by 2.4 percentage points which represents a 41% drop in the proportion of people wanting a revolution. For a person who jumps from the bottom to top income quartile within their country, the probability declines by a similar amount. The results are robust to controlling for country and year effects, country‐specific time trends and take account of the potential endogeneity of GDP.
In: American journal of political science: AJPS, Volume 48, Issue 4, p. 830-848
ISSN: 0092-5853
In: The economic journal: the journal of the Royal Economic Society, Volume 113, Issue 488, p. F409-F411
ISSN: 1468-0297
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Working paper
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Working paper
A fundamental requirement of market economies is the security of ownership claims to property. Yet history is littered with cases of challenges to these claims. A large literature has found contradictory evidence for the effect of income and income inequality on revolt, possibly due to omitted variable bias. The primary innovation of the paper is to tackle this problem in two ways. First, it introduces a new panel data set derived from surveys of revolutionary support across one-quarter of a million randomly sampled individuals. This allows one to control for unobserved fixed effects. Second, the estimated regressions are based on a choice-theoretic model of revolt that also helps us to choose an instrument set. After controlling for personal characteristics, country and year fixed effects, more people are found to favor revolt when inequality is high and their net incomes are low. An increase in inequality equivalent to a shift from Belgium to the US is predicted to increase support for revolt by 6.3 percentage points. An increase in net income of $US 3330 (in 1985 constant dollars) decreases revolutionary support by the same amount. The results indicate that 'going for growth' can buy a nation out of revolt.
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In: New Zealand Economic Papers, 54 (3), 239-273. DOI:10.1080/00779954.2019.1659846.
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In: The University of Auckland Business School Research Paper Series, Forthcoming
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Abstract. The Covid-19 outbreak has not only precipitated a health emergency, but also an economic crisis, unparalleled in modern history. For New Zealand to emerge from that crisis in a relatively healthy state, the Labour government will need to provide a clear framework for recovery, implementing policies which clearly prioritize those most affected by the societal and economic lockdown necessitated by the outbreak. To date, such prioritization has been lacking, with the Wage Subsidy Scheme unfairly advantaging big business and the professional elite, at the cost of money and resources which could have been better directed towards assisting the newly unemployed – namely workers, their families, and small business owners. Ultimately, poorly targeted support in the form of helicopter payments, wage subsidies, or broad-based tax cuts (such as a moratorium on GST) is wasteful, and will only serve to entrench inequalities that existed prior to the pandemic. Equally, the time and costs inherent in planning large-scale new infrastructure projects – and the fact that they offer little practical help to the majority of workers who require help now – means that they should not be regarded as a panacea, aiding economic recovery. Instead, clear, innovative policies, which not only prioritize those most in need, but which also lay the groundwork for further social and economic reform in the medium to long term, are required. For workers and their families, support can be offered via the mechanism of special risk accounts, tailored to meet their individual needs. For small business, help can be provided by facilitating conversations between businesses, landlords, and banks, as well as providing – upon the provision of an approved business plan – forgivable government loans. Finally, to help manage the recovery, and ensure our younger generations are not saddled with debt, the government must also identify, and eliminate, unnecessary spending, privilege, and waste. It can find an extra $15 billion per annum by doing so, contributing to the recovery in the short term, and – more generally – to implementing wider scale reform once the immediate crisis has been put behind it.Keywords. Covid-19, New Zealand economy.JEL. I12, J13, Z12, D13.
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In: New Zealand economic papers, Volume 54, Issue 3, p. 239-273
ISSN: 1943-4863
Many nations are seeking to reform their welfare states so that costs to the government can be reduced and the quality of outcomes improved. As a potential way to achieve these aims, there has been a surge of interest in the Singaporean model which features compulsory savings accounts and transparent pricing of health services. It has achieved some of the best health-care outcomes in the world at a cost that is the lowest amongst high income countries. In this paper we show how tax cuts can be designed to help establish compulsory savings accounts so that a publicly funded welfare system can be changed into one that relies more heavily on private funding in a politically feasible way. To our knowledge, showing how both a tax and welfare reform can be jointly designed to enable this transition to occur has not been done before. Our policy reform creates institutions that have features in common with Singaporean ones, especially for health-care. However there are also key differences. We present a new unified approach to the funding of health, retirement and risk-cover (for events like unemployment) through the establishment of a set of compulsory savings accounts. A case study of New Zealand is used as an illustration. The fiscal impact of our proposed reform on the government's current and future budgets is reported, as well as its effect on low, middle and high income individuals.
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