The Labour Market Effects of ‘Working for Families’ in New Zealand

Abstract

This article examines, using a behavioural microsimulation model for New Zealand, the impact of the major package of welfare reforms collectively referred to as ‘Working for Families’ (WfF). These reforms were announced in May 2004 and involved a phased introduction of changes, with annual modifications from October 2004 until April 2007. Concentrating on welfare payments for families with dependent children, this remains a cornerstone of the New Zealand welfare system. The simulation takes a backward‐looking perspective, by comparing labour supply under the 2008 database and tax structure with that obtained using the 2008 data and 2004 tax structure (suitably adjusted for inflation).