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The Distributional Impact of KiwiSaver Incentives

Author

Listed:
  • John Gibson

    (University of Waikato)

  • Chris Hector

    (University of Waikato)

  • Trinh Le

    (New Zealand Institute of Economic Research)

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.

Suggested Citation

  • John Gibson & Chris Hector & Trinh Le, 2008. "The Distributional Impact of KiwiSaver Incentives," Working Papers in Economics 08/02, University of Waikato.
    • Handle: RePEc:wai:econwp:08/02
    as

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    File URL: https://repec.its.waikato.ac.nz/wai/econwp/0802.pdf
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    References listed on IDEAS

    as
    1. 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.
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    Cited by:

    1. John Gibson, 2009. "The rising public sector pay premium in the New Zealand labour market," New Zealand Economic Papers, Taylor & Francis Journals, vol. 43(3), pages 255-261.
    2. Carla A. Houkamau & Chris G. Sibley, 2017. "Cultural Connection Predicts Perceptions of Financial Security for Māori," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 133(1), pages 395-412, August.

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    More about this item

    Keywords

    distributive impact; KiwiSaver; retirement saving; tax incentives;
    All these keywords.

    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

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