The Distribution of Income and Fiscal Incidence by Age and Gender: Some Evidence from New Zealand

Victoria University of Wellington Working Paper in Public Finance No. 10/2013

49 Pages Posted: 7 Jan 2014  

Omar Aziz

Government of New Zealand - Treasury

Norman Gemmell

Victoria University of Wellington - Victoria Business School

Athene Laws

Victoria University of Wellington

Date Written: April 30, 2013

Abstract

This paper examines the age and gender dimensions of income distribution and fiscal incidence in New Zealand using Household Expenditure Survey (HES) data for 2010 and a non-behavioural micro-simulation model. Since many fiscal policies are likely to have quite different incidences across age groups and genders, and with population ageing changing the age and gender composition of the voting population in many countries, age/gender dimensions of fiscal incidence become increasingly relevant. While this single ‘age distribution snapshot’ cannot fully capture lifecycle incidences, it avoids the complex and uncertain assumptions implicit in the latter and is an important component of lifetime redistribution calculations. We explore alternative methods of intra-family allocation of resources including ‘unequal share’ assumptions based on recent research into how families allocate their spending. Our evidence, which in general is not highly sensitive to sharing assumptions, suggests a strong ‘life cycle’ aspect to fiscal incidence whereby net tax liabilities are low, and generally negative, at younger and older ages but positive during much of the ‘working age’ period. Women, on average, are found to have a systematically and persistently lower net fiscal liability than men, most pronounced at older ages when greater female longevity exercises a strong influence. Nevertheless, considerable heterogeneity of fiscal incidence for both men and women is observed with the distributions of various fiscal incidence measures showing substantial overlap.

Suggested Citation

Aziz, Omar and Gemmell, Norman and Laws, Athene, The Distribution of Income and Fiscal Incidence by Age and Gender: Some Evidence from New Zealand (April 30, 2013). Victoria University of Wellington Working Paper in Public Finance No. 10/2013. Available at SSRN: https://ssrn.com/abstract=2375926 or http://dx.doi.org/10.2139/ssrn.2375926

Omar Aziz

Government of New Zealand - Treasury ( email )

No. 1, The Terrace
Wellington, 6011
New Zealand

Norman Gemmell (Contact Author)

Victoria University of Wellington - Victoria Business School ( email )

PO Box 600
Wellington 6140
New Zealand

Athene Laws

Victoria University of Wellington ( email )

P.O. Box 600
Wellington, 6140
New Zealand

Paper statistics

Downloads
1,850
Rank
6,311
Abstract Views
8,700