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This paper uses the Melbourne Institute Tax and Transfer Simulator to examine the effects of the New Tax System introduced in Australia in July 2000. First the whole set of changes is studied and then some of its components are discussed separately. From the results it is clear that the change in income tax rates and thresholds had the largest effect, because it affected a large proportion of the population whereas the changes to the benefit system are only relevant to smaller groups. Families with children benefited on average most from the changes, firstly through the changes in income taxes and secondly through the changes in Family Payments. However, families with children were also more likely to experience a loss indicating a wider range of positive and negative outcomes for this group.

The paper also provides an overview and comparison of methodologies commonly employed in labour market research. It demonstrates the danger of evaluating programs using short-term longitudinal data. It concludes by identifying a need for more reliable and up-to-date data, particularly longitudinal data, to better understand the long-term effects of work incentive programs.By reviewing current Australian and international literature, this research has improved our understanding of the effects of various work incentives on labour supply for different sub-groups. Key findings include: - the benefit level is found to have a small negative impact (for both men and women) on exit rates and labour supply - in-work benefits schemes in the United States and United Kingdom have demonstrated positive results for sole parents, but are small or ambiguous for partnered men and women - women, particularly sole mothers, are most sensitive to financial incentives - education improves employment prospects and appears to increase job tenure, with women benefiting more than men from a higher level of education - the effects of training are more ambiguous, with on-the-job-training proving effective for young men with low levels of education, but workfare programs appear to reduce the probability of finding work for educated people - early results from Australian studies indicate workfare and work experience programs (particularly wage subsidies and brokered employment programs) are effective in reducing the duration of unemployment, and increasing the duration of employment.

This paper uses a recent panel data set from New Zealand to examine the link between academic performance and the decision of teenagers to leave school. These choices have significant lifetime economic impacts, since early school leaving in many cases closes pathways to further education. We address the potential endogeneity and error correlation of academic performance and later school-leaving choices. The results show that schooling decisions largely represent personal choice, and that they are influenced by factors that are at work for a long period of time. Personal ability, parental education and income during early and later childhood years influence the demand for education, exerting their influence directly and through academic performance. These results point to the role that academic performance could play in breaking cycles of disadvantage.

This paper provides a literature review on economics of the family. In particular, where decisions of families related to marriage, fertility, labour supply and home production are concerned. First an overview of the theory on these issues is given, followed by a selection of empirical studies. Finally, the review highlights some areas of interest for future research in Australia.

This paper estimates discrete choice models of labour supply for couples, single men, single women and sole parents in Australia using the Income and Housing Costs Survey of 1994/1995, 1995/1996, 1996/1997 and 1997/1998. These models are estimated to serve as input in a microsimulation model, where they generate the behavioural responses to policy changes. The results are according to expectations, with preferences for work being higher for people with higher education, who are in their thirties. Furthermore, for women the presence of young children decreases the preference for work. Expected labour supply, predicted by using the estimated models, results in values close to the observed averages.

This paper presents the results of two policy simulations for couples with and without children. The first policy involves a reduction of the highest withdrawal rate from 70 to 60 per cent. The second policy reduces all withdrawal rates of 70 and 50 per cent to 30 per cent. A comparison is made between the two policies to determine the magnitude of the impact on government expenditure and labour supply responses. Both policies have the effect of increasing the net income of those who are either partly relying on benefit payments or whose pre-reform income is just above the pre-reform cut-out points. Other people are unaffected, which means that overall government expenditure will increase. Behavioural simulations show that married men and women seem to be relatively unresponsive to the first policy. This implies that minor changes in the withdrawal rate do not seem to be effective. The second policy induces larger behavioural changes. The transition matrices suggest that married women are more responsive to a reduction in the taper rate than men. Overall, women are working less on average whereas men tend to work more on average. These results are similar to the effects found in the US and UK literature.

This paper presents results for five separately estimated sets of participation and wage equations. The Australian working-age population is divided into sole parents, single men, single women, married men and married women. The approach in this paper takes the censoring of labour supply observations at 50 hours per week into account. The results for the wage equations are as anticipated with education, work experience and age increasing the expected wage. As expected, allowing for the censoring of labour supply reduces the predicted wage levels, particularly for married men who are most likely to work 50 hours or more.

Previous studies find a positive relationship between juvenile and adult criminal involvement. Using data on males from the Delinquency in a Birth Cohort II study, we investigate whether this correlation is due to unobserved characteristics that increase the probability of both juvenile and adult crime, or whether it is due to true state dependence in crime. Distinguishing between state dependence and heterogeneity is important from a policy perspective. For example, if youthful crime causes adult crime, then policies that reduce a juvenile's criminal behavior will also reduce criminal behavior as an adult. Using a treatment effects model, we find evidence of both state dependence and heterogeneity in the relationship between juvenile and adult crime. The causal influence of delinquency on adult crime is largest for white males and males with fewer years of schooling. The findings suggest that preventive policies that divert juveniles from crime are a viable policy tool for reducing the overall rate of crime.

This publication is a manual for the use of the Melbourne Institute Tax and Transfer Simulator (MITTS). MITTS provides a tool for analysing policy changes. It allows us to examine the effect of a variety of policy changes on labour supply and income distribution for the Australian.

This paper uses the Melbourne Institute Tax and Transfer Simulator (MITTS) to examine the effects of a reduction in the means-tested benefit taper, or withdrawal, rates in Australia to 30 per cent. That is, all taper rates of 50 per cent and 70 per cent in the 1998 system are reduced to 30 per cent, while leaving all basic benefit levels unchanged. This change is therefore expected to ‘flatten’ the tax structure by reducing the high marginal tax rates applying to those with relatively low incomes and increasing the marginal tax rates of medium incomes. Simulations in which all individuals are assumed to have an unchanged labour supply (using MITTS-A) are compared with behavioural simulations in which the majority of individuals are free to adjust the number of hours worked (using MITTS-B). The results reflect only the supply side of the labour market. The database used is the 1997 Income Distribution Survey (IDS), so that weekly incomes are based on the financial year 1997-98.

This paper examines the computation of exact welfare measures in the context of labour supply models. It is suggested that the standard method of computing compensating and equivalent variations does not allow su.ciently for the nonlinearity of the budget constraint. An exact method is suggested. The method is applied to contexts in which individuals are allowed to vary their hours continuously and where only a limited number of discrete hours of work are available. Discrete hours models have in recent years been used in view of the substantial econometric advantages when estimating the parameters of direct utility functions.

In this paper, a simultaneous discrete choice model for welfare participation and labour supply of two-adult households is estimated. It is assumed that in addition to the indirect effect of welfare participation on utility, welfare participation also has a direct effect. The resulting net effect is unknown and may depend on personal characteristics. To account for the direct effect of welfare participation on utility, a parameter to measure the disutility associated with welfare participation is included in the utility function. This model allows for the fact that not all eligible people are participating in welfare. The results indicate that there is evidence of a significant disutility associated with welfare participation. From simulations, it is found that a change in the benefit withdrawal rate or the maximum benefit level does not seem to have a large effect on the labour supply of either adult.

Knowledge of the tail shape of claim distributions provides important actuarial information. This paper discusses how two techniques commonly used in assessing the most appropriate underlying distribution can be usefully combined. The maximum likelihood approach is theoretically appealing since it is preferable to many other estimators in the sense of best asymptotic normality. Likelihood based tests are, however, not always capable to discriminate among non-nested classes of distributions. Extremal value theory offers an attractive tool to overcome this problem. It shows that a much larger set of distributions is nested in their tails by the so-called tail parameter. This paper shows that both estimation strategies can be usefully combined when the data generating process is characterized by strong clustering in time and size. We find that the extreme value theory is a useful starting point in detecting the appropriate distribution class. Once that has been achieved, the likelihood-based EM-algorithm is proposed to capture the clustering phenomena. Clustering is particularly pervasive in actuarial data. An empirical application to a four-year data set of Dutch automobile collision claims is therefore used to illustrate the approach.

Rural communities continue to experience shortages of doctors, placing increased work demands on the existing rural medical workforce. This paper investigates patterns of geographical variation in the workload and work activities of GPs by community size. Our data comes from wave 1 of the Medicine in Australia: Balancing Employment and Life longitudinal study, a national study of Australian doctors. Self-reported hours worked per usual week across eight workplace settings and on-call/ after-hours workload per usual week were analysed against seven community size categories. Our results showed that a GP’s total hours worked per week consistently increases as community size decreases, ranging from 38.6 up to 45.6 h in small communities, with most differences attributable to work activities of rural GPs in public hospitals. Higher on-call workload is also significantly associated with smaller rural communities, with the likelihood of GPs attending more than one callout per week ranging from 9% for metropolitan GPs up to 48–58% in small rural communities. Our study is the first to separate hours worked into different work activities whilst adjusting for community size and demographics, providing significantly greater insight to the increased hours worked, more diverse activities and significant after-hours demands experienced by current rural GPs.

This paper examines the impact of the Counseling and Monitoring program for the unemployed with particular reference to their job finding rate, application intensity, and matching probability. The effectiveness of Counseling and Monitoring is measured by using a job search model in which the job finding rate is equal to the product of the application intensity and the matching probability. Counseling and Monitoring is an intensive job search assistance program designed to help unemployed people receiving unemployment benefits to find a job as quickly as possible. The empirical analysis is based on data from a social experiment. A sample of the inflow into unemployment was randomly assigned to a treatment and a control group. The empirical results, based on formal reduced-form models, show that Counseling and Monitoring does reduce the time taken to find a job because people participating in the program make more applications than those who are not participating, although no differences are found in matching probabilities.

Consider two sets of records from the same survey. One preserves full detail about a few questions under focus (on labour supply), but contains almost no other variables. The other set contains very little information about the question of interest, but has complete information on the remaining variables. Unfortunately, the key that would allow the two sets to be matched is not available. However, the structure of the record sets does allow a partial matching. In order to extract the maximum amount of information about the question of interest, the use of statistical inference is required. In this paper the EM algorithm, which has been used successfully with censored and incomplete data sets, is adapted to the problem of scrambled data. The performance of the method is assayed using an artificially constructed data set. The relevance of the results for a real world labour market problem is explored.

The eminent contributors (including Altshuler, Creedy, Freebairn, Gravelle, Heady, Kalb, Sørensen and Zodrow) investigate the beneficial directions for medium-term tax reform in the light of global developments and lessons from the latest taxation research. In addressing this issue, they review recent advances in both the theoretical and empirical tax literature and reform evidence from individual countries. Topics covered include the impact of taxes on economic performance; international and corporate taxation; personal tax and welfare systems; environmental taxation; and country-specific tax reform experiences.

Objective: To compare the level and determinants of job satisfaction between four groups of Australian doctors: general practitioners, specialists, specialists-in-training, and hospital non-specialists. Design, participants and setting: National cross-sectional questionnaire survey as part of the baseline cohort of a longitudinal survey of Australian doctors in clinical practice (Medicine in Australia — Balancing Employment and Life [MABEL]), undertaken between June and November 2008, including 5193 Australian doctors (2223 GPs, 2011 specialists, 351 hospital non-specialists, and 608 specialists-in-training). Main outcome measures: Job satisfaction scores for each group of doctors; the association between job satisfaction and doctor, job and geographical characteristics. Results: 85.7% of doctors were moderately or very satisfied with their jobs. There were no differences in job satisfaction between GPs, specialists and specialists-in-training. Hospital non-specialists were the least satisfied compared with GPs (odds ratio [OR], 0.56 [95% CI, 0.39–0.81]). For all doctors, factors associated with high job satisfaction were a good support network (OR, 1.72 [95% CI, 1.41–2.10]), patients not having unrealistic expectations (OR, 1.48 [95% CI, 1.25–1.75]), and having no difficulty in taking time off work (OR,1.48 [95% CI, 1.20–1.84]). These associations did not vary across doctor types. Compared with GPs, on-call work was associated with lower job satisfaction for specialists (OR, 0.48 [95% CI, 0.23–0.98]) and hospital non-specialists (OR, 0.25 [95% CI, 0.08–0.83]). Conclusion: This is the first national survey of job satisfaction for doctors in Australia. It provides an important baseline to examine the impact of future health care reforms and

This paper aims to describe two sets of labour supply models, for Australia and New Zealand respectively. Both models use a similar specification; they are discrete choice structural labour supply models incorporating a large amount of detail on the relevant tax and transfer systems. The Australian models are based on Survey of Income and Housing Cost data between 1994 and 1998, and on data between 1999 and 2004, the New Zealand models are based on Household Economics Survey data between 1991 and 2001. In both countries, separate models are estimated for single men, single women, single parents and couple families. Average wage elasticities are derived and compared for a range of different subgroups.

A Bayesian estimation procedure is developed for estimating multiple regime (multiple threshold) vector autoregressive models appropriate for deviations from financial arbitrage relationships. This approach has clear advantages over classical stepwise threshold autoregressive analysis. Whereas classical procedures first have to identify thresholds and then perform piecewise autoregressions, we simultaneously estimate threshold and autoregression parameters. To illustrate the Bayesian procedure, we estimate a no-arbitrage band within which index futures arbitrage is not profitable despite (persistent) deviations from parity.

Background The geographic distribution of general practitioners (GPs) remains persistently unequal in many countries despite notable increases in overall supply. This paper explores how the factors associated with the supply of general practitioners (GPs) are aligned with the arbitrary geographic boundaries imposed by the use of spatially referenced GP supply data. Methods Data on GP supply in postcodes within Australia are matched to data on the population characteristics and levels of amenities in postcodes. Tobit regression models are used that examine the associations between GP supply and postcode characteristics, whilst accounting for spatial heterogeneity. Results The results demonstrate that GPs do not consider space in a one-dimensional sense. Location choice is related to both neighbourhood-specific factors, such as hospitals, and broader area factors, such as area income and proximity to private schools. Although the proportion of females and elderly were related to GPs supply, mortality rate was not. Conclusions This paper represents the first attempt to map the factors influencing GP supply to the appropriate geographic level at which GPs may be considering that factor. We suggest that both neighbourhood and broader regional characteristics can influence GPs’ locational choices. This finding is highly relevant to the design and evaluation of relocation incentive programmes.

This book provides a detailed introduction to behavioural tax microsimulation methods and reviews the use of such models for evaluating tax policy reforms.

Tax policy questions may relate to specific problems, concerning perhaps the revenue implications of a particular tax, or they may involve an extensive analysis of the cost and redistributive effects of many taxes and transfer payments. This book is concerned with the ways in which tax policy design can be enhanced by the use of a behavioural tax microsimulation model capable of evaluating the effects of planned or actual tax reforms. An advantage of such a large-scale tax simulation model, which reflects the heterogeneity of the population and captures the details of the tax structure, is that it can examine detailed practical policy questions and can provide direct inputs into policy debates. After introducing behavioural models, the authors discuss the role of means testing, several hypothetical policy reforms, actual and proposed reforms and recent modelling developments.