New Economics Papers
on Public Finance
Issue of 2008‒01‒19
three papers chosen by

  1. Welfare reform in the UK: 1997 - 2007 By Mike Brewer
  2. Tax reform and retirement saving incentives: evidence from the introduction of stakeholder pensions in the UK By Richard Disney; Carl Emmerson; Matthew Wakefield
  3. Rule of Thumb Consumers, Public Debt and Income Tax By Raffaele Rossi

  1. By: Mike Brewer (Institute for Fiscal Studies)
    Abstract: <p><p><p><p>This paper, written at the request of the Economic Council of Sweden, presents a tour of welfare reform in the UK since the last change of government, summarising the most important changes in active labour market policies, and in measures intended to strengthen financial incentives to work. It argues that developments in the UK's active labour market policies occurred in two broad phases: first, the Government sought to strengthen ALMPs for those individuals deemed to be unemployed, through the New Deal programme. Second, the Government has reformed benefits for individuals traditionally viewed as inactive and thus excused job search activity, such as lone parents, and the sick and disabled. Accompanying these have been changes to direct taxes, tax credits and welfare benefits aiming to strengthen financial work incentives. However, financial work incentives have been strengthened by less than might be expected given the early rhetoric: the expansion in family-based tax credits have weakened the financial work incentives of (potential) second earners in families with children, many more workers now face combined marginal tax and tax credit withdrawal rates in excess of 60% than a decade ago, and a desire to achieve broad reductions in relative child poverty has led the Government to increase substantially income available to non-working families with children. We also summarise evaluations of three important UK welfare-to-work reforms (WFTC, NDYP and Pathways to Work), but without comparing their efficacy.</p></p></p></p>
    Date: 2007–05
  2. By: Richard Disney (Institute for Fiscal Studies and University of Nottingham); Carl Emmerson (Institute for Fiscal Studies); Matthew Wakefield (Institute for Fiscal Studies)
    Abstract: <p><p>Faced with ageing populations, OECD governments are seeking policies to increase individual retirement saving. In April 2001, the UK government introduced Stakeholder Pensions - a low cost retirement saving vehicle. The reform also changed the structure of tax-relieved contribution ceilings, increasing their generosity for lower earning individuals. We examine the impact of these changes on private pension coverage and on contributions to personal pension accounts using individual level micro data. </p></p>
    Date: 2007–11
  3. By: Raffaele Rossi
    Abstract: This paper analyzes a New Keynesian model with Rule-of-Thumb consumers (ROTC) as in Galí et al.(2007) and a fiscal policy which levies a proportional income tax. We …nd that, when the share of ROTC is above a specified threshold and di¤erently from the usual Leeper (1991) result, the determinacy condition requires for both monetary and fiscal policy to be either active of passive. Furthermore we show that the introduction of a set of ROTC can reverse the traditional predictions of a change in government spending on the economy as a whole: under a reasonable parametrization of the model, an increase in government spending can lead, against the common Keynesian wisdom, to a decrease in total output. Finally we point out that with the introduction of a distortive fiscal policy and independently of the parametrization used, private consumption responds negatively to a positive government spending shock.
    Keywords: Rule-of-thumb-consumers, monetary-fiscal policy interactions, distortive taxation, public spend- ing, private consumption.
    JEL: E32 E62 H30
    Date: 2007–12

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