The Treasury today published three research papers under its Working Papers series.
The first, entitled KiwiSaver: An Initial Evaluation of the Impact on Retirement Saving, presents the results of an evaluation into the impact on individuals’ saving behaviour following the introduction of the KiwiSaver scheme in 2007.
The paper, by Dr Grant Scobie, David Law and Lisa Meehan, summarises the authors’ analysis of data collected in a national survey of 825 individuals conducted by personal interviews between January and March 2010, findings first presented in a paper to the annual conference of the NZ Association of Economists in June of this year where it won the inaugural award for the best paper analysing public policy.
It should be noted that the analysis in this paper is based on the policy settings for KiwiSaver as they prevailed at the time of the survey. The authors stress there are clear limitations to the data on which this study is based because the scheme had been in place for less than three years at the time of the survey, whereas changes in saving behaviour may be expected to occur over much longer periods of time.
The paper, available at http://www.treasury.govt.nz/publications/research-policy/wp/2011/11-04 is part of analysts’ ongoing research into the impact of the KiwiSaver scheme. Further evaluation awaits additional data from the Survey of Family, Income and Employment (SOFIE).
In conjunction with the Inland Revenue Department, Treasury analysts developed a set of questions on KiwiSaver that were included in the final wave of SOFIE, a major longitudinal panel survey conducted by Statistics New Zealand between 2002 and 2010. It is expected that the full set of results from SOFIE will be available for analysis in 2012, and the findings of that additional analysis may shed further light on any behavioural changes induced by the introduction of the KiwiSaver scheme.
The second paper, Tax Rates and Revenue Changes: Behavioural and Structural Factors by Dr John Creedy and Dr Norman Gemmell, examines how changes to marginal income tax rates flow through to the Crown’s tax revenue - that is, the elasticity of tax revenue following changes to marginal tax rates.
The paper, available at http://www.treasury.govt.nz/publications/research-policy/wp/2011/11-05, provides a decomposition of the impact, at individual and aggregate levels, on reported taxable income arising from changes in marginal tax rates.
One component of the change in revenue concerns the way individuals respond to change in tax rates: this concerns the adjustment to taxable income, which can arise for a variety of reasons. A second component is the effect on tax revenue of the change in taxable income, and this depends only on the tax structure itself. The conditions under which an increase in a marginal tax can actually lead to a reduction in revenue are examined.
The technical decomposition of tax revenue changes, using a number of elasticity concepts, is illustrated using the changes to the New Zealand income tax structure in Budget 2010 which reduced marginal income tax rates while leaving income tax thresholds unchanged.
The third paper, Foreign Acquisition and the Performance of New Zealand Firms, was authored by Dr Richard Fabling and Lynda Sanderson.
Available at http://www.treasury.govt.nz/publications/research-policy/wp/2011/11-06 the paper examines the firm-level determinants of foreign acquisitions of New Zealand-based companies and the consequences of foreign acquisition for both the purchased firms and the workers within those firms.
The results of the study suggest that foreign firms tend to target high-performing New Zealand-based companies for acquisition and that, on average, acquired firms tend to exhibit higher growth in average wages and output relative to similar domestic firms. However, foreign acquisition does not appear to have an impact on firm survival, productivity performance or capital intensity.
The views, opinions, findings, and conclusions or recommendations expressed in Treasury research working papers are strictly those of the authors and do necessarily reflect the views of the Treasury.