What was the impact of neoliberalism on welfare spending in the USA?
12 Apr 2015 Leave a comment
in welfare reform Tags: Director's Law, expressive voting, growth in government, welfare spending
A Guaranteed Minimum Income for New Zealand? The Treasury costings
12 Apr 2015 Leave a comment
in income redistribution, politics - New Zealand, politics - USA, welfare reform
The Treasury modelled a Guaranteed Minimum income (GMI) at the request of the Welfare Working Group in 2010. A GMI paying $300 per week – the mean benefit income among those on benefits – would cost $44.5 billion (model 1) or $52.6 billion if we extended it to super annuitants as a replacement for NZ Superannuation or old age pension (model 2). The former could be covered by a flat personal income tax rate of 45.4%; the latter, 48.6%.

Full fiscal neutrality would require tax rates of 50.6% and 54.4% – the lower tax rates would be just enough to cover the transfers, but income tax revenues are currently also used to fund more than just transfers.
If we recognize that most parents are beneficiaries via Working for Families and compensate them for their loss with a $86 per child per week payment (model 3), we get a $57.1 billion fiscal cost and a personal tax rate of 50% (or 55.7% for fiscal neutrality).
Treasury noted that many beneficiaries (including the disabled, carers and sole parents) currently receive more than $300 per week and would be made financially worse off under a GMI scheme.
Treasury also warned about potential adverse labour supply responses to the necessary higher personal income tax rates. The large gap between company and personal tax rates would increase IRD’s enforcement costs.
In 1987, Finance Minister Roger Douglas announced a Guaranteed Minimum Family Income Scheme to accompany a new 22% flat income tax. The idea did not go ahead.
Richard Nixon also proposed a guaranteed minimum family income plan in 1969 to replace the Aid to Families with Dependent Children (AIDC) scheme at the behest of future Senator Daniel Patrick Moynihan. This was based on the negative income tax proposals of Milton Friedman and George Stigler. Nixon’s plan passed the House but not the Senate after 3 years of infighting.
The final outcome was the earned income tax credit (EITC) in 1975 that was expanded significantly in the 1990s to become the largest single federal income transfer programme. One attraction of the EITC is that because its benefits rise positively with earnings up to the phase-out point, so it can have a positive rather than negative effect on work incentives for workers on a low wage.
Australia has the most targeted welfare state
10 Apr 2015 2 Comments
in politics - Australia, politics - New Zealand, politics - USA, poverty and inequality, welfare reform Tags: welfare state
In Mexico, most cash-based public social benefits go to households in the highest income quintile, per OECD. http://t.co/xykkPkDVZs—
Catherine Rampell (@crampell) November 24, 2014
Single motherhood compared internationally
05 Apr 2015 Leave a comment
in gender, health economics, labour economics, occupational choice, population economics, welfare reform Tags: single parents
The impact of US 1996 welfare reforms on single mothers’ employment
03 Apr 2015 Leave a comment
in gender, labour economics, labour supply, poverty and inequality, welfare reform Tags: 1996 US welfare reforms, female labour force participation, single parents
The rising educational attainment of the poor
01 Apr 2015 Leave a comment
in economics of education, human capital, labour economics, labour supply, poverty and inequality, welfare reform Tags: educational attainment
@mattyglesias poverty trends a good example of why americanprogress.org/issues/poverty… http://t.co/tgn7RzBKzw—
Shawn Fremstad (@inclusionist) March 28, 2015
A tale of two parents
30 Mar 2015 Leave a comment
in human capital, labour economics, labour supply, occupational choice, politics - USA, population economics, poverty and inequality, welfare reform Tags: child poverty, family demographics, family structures, single parents
Did poverty increase after the 1996 US Federal welfare reforms?
29 Mar 2015 Leave a comment
in discrimination, labour economics, politics - USA, poverty and inequality, welfare reform Tags: 1996 US welfare reforms, child poverty, poverty and inequality
Far Left Mana Movement admits it’s really cheap to feed the kids
23 Mar 2015 Leave a comment
in applied welfare economics, labour economics, politics - New Zealand, poverty and inequality, welfare reform Tags: activists, child poverty, Leftover Left, school breakfast programmes
Joe Trinder, the Mana News editor, today blogged about the great expense of feeding the kids for ordinary families. In the course of doing so, he showed how extremely cheap it was for parents to make their children breakfast. The Far Left has inadvertently capitulated on school breakfast programmes been outside the reach of ordinary families.

I completely agree with Joe. A 1 kg box of Weet-Bix costs $7 and a 2 L bottle of milk costs $5.55. I buy the cheaper brands of Weet-Bix than this myself.

1 kg box of Weet-Bix will last maybe two weeks. 2 L of milk will last not much less than that if you pour the milk on Weet-Bix to the extent I do. Two weeks breakfast will cost much less than one dollar per breakfast as argued by Eugene Rush in her letter to the editor a few months ago.
If a family can’t find $.55 to make their children breakfast, they need targeted specific intervention from Work and Income New Zealand to see what additional financial assistance they need, including budget advice, and from the child protection agency, Child, Youth and Families.
- Providing a hungry child with breakfast at school through a Feed the Kids Bill is parliamentary grandstanding that doesn’t strike at the root of the problem.
- These hungry children are not provided with breakfast either at the weekend or during the school holidays. They are abandoned by the process set up under the Feed the Kids Bill championed by the hard left.
- Worst of all, what about the parents? No good parent would have breakfast while their child goes hungry.
No provision is made by the hard left in its Feed the Kids Bill to feed the parents of these hungry children who also go hungry every morning. There is no other charitable explanation as to why their children were not given breakfast. No one in the house can afford breakfast both during school days, at the weekend and in school holidays.

As shown from the screenshot above, the Otago University’s annual Food Cost Survey suggests that to meet basic needs, a family must spend $44 per week for a five-year-old and $34 per week for a four-year-old in Wellington, which is where I live. That is, it costs about five or six dollars per day per child to feed them. A liberal diet for a small child for a day costs not much more than a cup of coffee at a cafe where I’m going shortly. The real issue is the income of parents.
The best solution to poverty is to move people into a job. Simon Chapple is quite clear in his book in the middle of last year with Jonathan Boston that a sole parent in full-time work, and a two parent family with one earner with one full-time and one part-time worker, even at low wages, will earn enough to lift their children above most poverty thresholds.
Sustained full-time employment of sole parents and the fulltime and part-time employment of two parents, even at low wages, are sufficient to pull the majority of children above most poverty lines, given the various existing tax credits and family supports.
The best available analysis, the most credible analysis, the most independent analysis in New Zealand or anywhere else in the world that having a job and marrying the father of your child is the secret to escaping poverty is recently by the Living Wage movement in New Zealand.
According to the calculations of the Living Wage movement, earning only $18.80 per hour with a second earner working only 20 hours per week affords their two children, including a teenager, Sky TV, pets, international travel, video games and 10 hours childcare. This analysis of the Living Wage movement shows that finishing school so your job pays something reasonable and marrying the father of your child affords a comfortable family life.
The reversing gender gap
19 Mar 2015 Leave a comment
in discrimination, gender, human capital, labour economics, labour supply, occupational choice, poverty and inequality, welfare reform Tags: gender wage, reversing gender gap, sex discrimination
Single parenthood in the USA by ethnicity
18 Mar 2015 1 Comment
in economics of love and marriage, gender, labour economics, occupational choice, poverty and inequality, welfare reform Tags: child poverty, economics of fertility, single parenthood, single parents
Children in single-parent families have lower achievement on average than those in two-parent families
17 Mar 2015 Leave a comment
in economics of education, labour economics, poverty and inequality, welfare reform Tags: single parents
NZ is in the middle of the pack in reducing poverty rates through redistribution
16 Mar 2015 Leave a comment
in income redistribution, labour economics, politics - Australia, politics - New Zealand, politics - USA, poverty and inequality, welfare reform Tags: child poverty, welfare state
The figure shows pre-transfer and post-transfer poverty rates among OECD countries (mostly the advanced economies). The former (pre-transfer) are the market-driven poverty rates, before the tax and transfer systems kick in.

Source: OECD, *Poverty thresholds: 50% of median income.
An International Look at the Single-Parent Family–where is New Zealand?
16 Mar 2015 1 Comment
in discrimination, economics of love and marriage, gender, labour economics, labour supply, law and economics, occupational choice, welfare reform Tags: economics of fertility, family demographics, labour demographics, single parents




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