Melbourne Institute of Applied Economic and Social Research - Research Publications
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ItemUnderstanding the Rising Trend in Female Labour Force Participation(Wiley, 2022-12-28)Female labour force participation has increased tremendously since World War II in developed countries. Prior research provides piecemeal evidence identifying some drivers of change but largely fails to present a consistent story. Using a rare combination of data and modelling capacity available in Australia, we develop a new decomposition approach to explain rising female labour force participation since the mid-1990s. The approach allows us to identify the role of tax and transfer policy reforms as well as three other factors that have been shown to matter by earlier studies: (i) changes in real wages; (ii) population composition changes; and (iii) changes in labour supply preference parameters. For the first time, all these factors are identified through a single consistent decomposition framework. A key result is that – despite the ongoing emphasis of public policy on improved work incentives for women in Australia and elsewhere – changes in financial incentives due to tax and transfer policy reforms have contributed relatively little to achieve these large increases in participation. Instead, the other three factors drive the increased female labour force participation.
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ItemFuture Directions: Study Protocol for an Effectiveness-Implementation Hybrid Evaluation of a State-based Social Housing Strategy and Three Social Housing Programs(Edinburgh University Library, 2021)Background: In the Australian state of New South Wales nearly 60,000 approved applicants are waiting for social housing. Future Directions for Social Housing is a response to this challenge. This collection of housing programs aims to provide more social housing, support and incentives for leaving social housing and a better social housing experience. This document presents the protocol of the evaluation of these programs and the overarching Future Directions Strategy. Methods/Design: The evaluation will use a Type 1 effectiveness-implementation hybrid design, with an integrated, dual focus on assessing the effectiveness of Future Directions and better understanding the context for reform implementation. Program effectiveness will be examined using quasi-experimental techniques applied to linked administrative data. The implementation context will be examined via program level data, qualitative interviews and focus groups with stakeholders and tenants. Some quantitative survey and administrative data will also be used. Findings from the implementation evaluation will be used to inform and interpret the effectiveness evaluation. Economic evaluations will also be conducted. Discussion: This methodology will produce a high-quality evaluation of a large, complex government program which aims to facilitate rapid translational gains, real-time adoption of effective implementation strategies and generate actionable insights for policymaker
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ItemA microsimulation analysis of marginal welfare-improving income tax reforms for New Zealand(Springer Verlag, 2020)This paper examines the direction of welfare-improving income tax reforms in the context of New Zealand, which recently reduced its top marginal income tax rate to one of the lowest in the OECD. A behavioural microsimulation model is used, in which social welfare functions are defined in terms of either money metric utility or net income. The model allows for labour supply responses to tax changes, in which a high degree of population heterogeneity is represented along with the details of the highly complex income tax and transfer system. The implications of the results for specific combinations of tax rate or threshold changes that are both revenue neutral and welfare improving are explored in detail, recognising the role of distributional value judgements. Results suggest, under a wide range of parameter values and assumptions, that raising the highest income tax rate and/or threshold would be part of a welfare-improving reform package.
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ItemSurvey under-coverage of top incomes and estimation of inequality: what is the role of the UK’s SPI adjustment?(Wiley, 2018-06)Survey under-coverage of top incomes leads to bias in survey-based estimates of overall income inequality. Using income tax record data in combination with survey data is a potential approach to address the problem; we consider here the UK’s pioneering ‘SPI adjustment’ method that implements this idea. Since 1992, the principal income distribution series (reported annually in Households Below Average Income) has been based on household survey data in which the incomes of a small number of ‘very rich’ individuals are adjusted using information from ‘very rich’ individuals in personal income tax return data. We explain what the procedure involves, reveal the extent to which it addresses survey under- coverage of top incomes, and show how it affects estimates of overall income inequality. More generally, we assess whether the SPI adjustment is fit for purpose and consider whether variants of it could be employed by other countries.
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ItemTop incomes and inequality in the UK: reconciling estimates from household survey and tax return data(Oxford University Press, 2018-04-01)We provide the first systematic comparison of UK inequality estimates derived from tax data (World Wealth and Income Database) and household survey data (the Households Below Average Income [HBAI] subfile of the Family Resources Survey). We document by how much existing survey data underestimate top income shares relative to tax data. Exploiting the flexibility that access to unit-record survey data provides, we then derive new top-income-adjusted data. These data enable us to: better track tax-data-estimated top income shares; change the definitions of income, income-sharing unit, and unit of analysis used and thereby undertake more comparable cross-national comparisons (we provide a UK-US illustration); and examine UK inequality levels and trends using four summary indices. Our estimates reveal a greater rise in the inequality of equivalized gross household income among all persons between the mid-1990s and late 2000s than shown by the corresponding HBAI series, especially between 2004/05 and 2007/08.undertake more comparable cross-national comparisons (we provide a UK-US illustration); and examine UK inequality levels and trends using four summary indices. Our estimates reveal a greater rise in the inequality of equivalized gross household income among all persons between the mid-1990s and late-2000s than shown by the corresponding HBAI series, especially between 2004/05 and 2007/08.
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ItemFood insecurity and homelessness in the Journeys Home survey(ACADEMIC PRESS INC ELSEVIER SCIENCE, 2017-09)Homelessness not only deprives people of comfort, safety, and dignity but may also cause other problems, including food insecurity. This study uses data from the Journeys Home survey, a large national longitudinal survey of disadvantaged Australians who were homeless or at risk of homelessness, to estimate multivariate behavioural Rasch models of the association between homelessness and food insecurity. The Journeys Home survey includes an extensive set of measures of people's circumstances that we include in our models. We also estimate dummy endogenous variable specifications. All our specifications indicate that homelessness is associated with higher (worse) food insecurity for men. We find unconditional associations in the same direction for women, but these become statistically insignificant when we include extensive sets of observed controls in our models or estimate dummy endogenous variable specifications. Finally, we investigate how homelessness is related to food consumption, meal consumption, and food expenditures. Food expenditures are negatively associated with homelessness for men in all our specifications; however, the other food outcomes for men and women do not show consistent, statistically significant associations.
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ItemIntergenerational correlation of labor market outcomes(Springer US, 2016-03-01)This paper contributes to the relatively limited literature on the correlation of labor market outcomes of parents and their children. This literature is relevant to the larger literature on intergenerational income mobility since correlation in intergenerational labor market outcomes is one of the potential factors contributing to the intergenerational correlation of permanent incomes. In this paper, we consider the time spent in unemployment by both sons and daughters, while accounting for the potential endogeneity of education. Using the Household, Income and Labour Dynamics in Australia data, we find evidence of a positive correlation of labor market outcomes between fathers and sons and, to a lesser extent, between mothers and daughters. In addition, the results reveal a significant relationship between parents’ and children’s education levels, indicating that there is an indirect association of parental education with their children’s labor market outcomes through education.
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ItemExplaining the equalising effect of panel-income changes(De Gruyter, 2016-09-01)Panel-income changes tend to be equalising but existing approaches provide little insight on the nature of this equalising process. I present a new decomposition framework showing explicitly how the equalising effect of panel-income changes depends on the respective size and distribution of panel-income gains and losses. One of the new insights gained from the application to US data for the 1970/2009 period is that most of the equalising effect occurs through income gains rather than income losses even in times of recession.
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ItemRecent Trends in Income Redistribution in Australia: Can Changes in the Tax-Benefit System Account for the Decline in Redistribution?(Wiley, 2015-03-01)We examine trends in the redistributive impact of the tax-benefit system in Australia between 1994 and 2009 using a framework that allows us to separate the contributions of taxes, benefits, and taxes and benefits combined. Furthermore, we identify the effect of tax-benefit policy reforms on income redistribution over the period. We find that after reaching a peak value in the late 1990s, the redistributive effect of taxes and benefits declined sharply. Although reforms to the tax-benefit system contributed to the decline in redistribution, their contribution was limited compared to the role played by the changes in market income distribution.
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ItemUnderstanding Changes in the Distribution and Redistribution of Income: A Unifying Decomposition Framework(Wiley, 2016-06)In recent decades income inequality has increased in many developed countries but the role of tax and transfer reforms is often poorly understood. We propose a new method allowing for the decomposition of historical changes in income distribution and redistribution measures into: (i) the immediate effect of tax-transfer policy reforms in the absence of behavioral responses; (ii) the effect of labor supply responses induced by these reforms; and (iii) a third component allowing us to explore the effect of changes in the distribution of a wide range of determinants, including the effect of employment changes not induced by policy reforms. The application of the decomposition to Australia reveals that the direct effect of tax-transfer policy reforms accounts for half of the observed increase in income inequality between 1999 and 2008, while the increased dispersion of wages and capital incomes also played an important role.