The Distributional Impact of KiwiSaver Incentives

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The Distributional Impact of KiwiSaver Incentives

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John Gibson () (University of Waikato)
Chris Hector () (University of Waikato)
Trinh Le () (New Zealand Institute of Economic Research)

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Abstract

New Zealand’s approach to retirement incomes profoundly changed with the recent introduction of KiwiSaver and its associated tax incentives. Previous policy reduced lifetime inequality but KiwiSaver and its tax incentives will increase future inequality and lead to diverging living standards for the elderly. In this paper we evaluate the distributional effects of these tax incentives. Using data from a nationwide survey conducted by the authors, we estimate the value of the equivalent income transfer provided to individuals by the tax incentives for KiwiSaver participation. Concentration curves and inequality decompositions are used to compare the distributive impact of these tax incentives with those for New Zealand Superannuation. Estimates are reported for both initial and lifetime impacts, with the greatest effect on inequality apparent in the lifetime impacts.

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Paper provided by University of Waikato, Department of Economics in its series Working Papers in Economics with number 08/02.

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Length: 17 pages
Date of creation: 20 Feb 2008
Date of revision:
Handle: RePEc:wai:econwp:08/02

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Find related papers by JEL classification:
D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
H22 - Public Economics - - Taxation, Subsidies, and Revenue - - - Incidence
J26 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Retirement; Retirement Policies

This paper has been announced in the following NEP Reports:

NEP-ALL-2008-02-23 (All new papers)

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

John, Susan St. & Willmore, Larry, 2001. "Two Legs are Better than Three: New Zealand as a Model for Old Age Pensions," World Development, Elsevier, vol. 29(8), pages 1291-1305, August. [Downloadable!] (restricted)

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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

John Gibson, 2008. "The Rising Public Sector Pay Premium in the New Zealand Labour Market," Working Papers in Economics 08/16, University of Waikato, Department of Economics. [Downloadable!]

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