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This paper presents a social accounting model to examine the entrants, exits and transitions of individuals among a wide range of benefit categories in New Zealand. Transition rates and flows are estimated separately for periods before the global financial crisis (GFC) and periods following the crisis. The data were obtained from the Benefit Dynamics Dataset maintained by the Ministry of Social Development. The model is used to examine, using simulations, the implications for the time profile of changes in the stock of benefit recipients under a range of counterfactual situations. It is suggested that the model can provide a useful tool for policy analysis.
We are grateful to Jason Raven, Mike O'Rourke and others in the Ministry of Social Development for the support that they have offered to us in accessing and using the Benefit Dynamics Dataset, and for comments on an earlier version of this paper. We are also grateful to Tony Burton, Ben Gleisner and others from the Labour Market and Welfare Team at the Treasury for their comments. We have benefited from comments by Paul Rodway, Nathan Penny and David Rea on an earlier draft.
The views, opinions, findings, and conclusions or recommendations expressed in this Working Paper are strictly those of the author(s). They do not necessarily reflect the views of the New Zealand Treasury or the New Zealand Government. The New Zealand Treasury and the New Zealand Government take no responsibility for any errors or omissions in, or for the correctness of, the information contained in these working papers. The paper is presented not as policy, but with a view to inform and stimulate wider debate.
Table of Contents
- 1 Introduction
- 2 The Framework of Analysis
- 2.1 Stocks and Flows
- 2.2 Examining the Potential Effects of Policy Changes
- 3 New Zealand Flows Data
- 3.1 The Data and Construction of Matrices
- 3.2 Average Durations
- 3.3 Decompositions
- 4 Simulations of Benefit Numbers
- 4.1 The Counterfactual Assumptions
- 4.2 Stocks by Benefit Type
- 5 Effects of Welfare Reforms
- 6 Conclusions
- Appendix A. Adjustment of Exit Frequencies
- Appendix B. The Benefit Dynamics Dataset
- Appendix C. Forward Coefficients Matrices
- Appendix D. Beneficiaries Working while Receiving Benefits
- Appendix E. The Matrix Multiplier
- Appendix F. Benefit Costs per Period