The Impact of Recent Welfare Reforms on Labour Supply Behaviour In New Zealand

Tim Maloney

No 223, Working Papers from Department of Economics, The University of Auckland

Abstract: New Zealand recently initiated sweeping reforms to its social welfare programmes by cutting benefits and tightening eligibility criteria. One of the objectives of these reforms was to provide incentives for people to enter or re-enter the labour force. Econometric analysis is used in this paper to isolate the actual effects of these benefit reforms on labour supply. Previous research in many counties has often failed to accurately measure the extent of these work disincentives, or to observe variation in these programmes that would allow this empirical analysis to take place. The structure of these benefit programmes in New Zealand, and the nature of these reforms offers a unique opportunity to identify these behavioural responses. Quarterly random samples of individuals between 1985 and 1995 are used to isolate the effects of these reforms, while controlling for a wide variety of other influences. This study finds compelling evidence that these benefit reforms resulted in a substantial increase in aggregate labour supply in this country.

Keywords: Economics (search for similar items in EconPapers)
Date: 1998
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Persistent link: https://EconPapers.repec.org/RePEc:auc:wpaper:223

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