Behavioural Microsimulation with Labour Supply Responses

This paper provides a technical survey of recent developments in behavioural microsimulation. We discuss the criteria by which models of labour supply may be chosen for application to behavioural microsimulation, and consider how such models may be augmented to control for fixed costs, child–related work costs, preference heterogeneity and endogeneity in wages. We describe methods by which non–linear budget constraints may be accommodated in estimation, policy simulations and welfare analysis, and discuss how stochastic terms may be factored into the simulation of behavioural responses to a policy shock.     

Population Ageing and Social Expenditure in New Zealand

As the population ages there will be potentially significant implications for a wide range of economic variables, including in particular the fiscal costs of social expenditures. Long‐term fiscal planning requires estimates of the possible future path of public spending. This article presents projections for 14 categories of social spending. These projections are based on detailed demographic estimates covering fertility, migration and mortality. Distributional parameters are incorporated for all of the major variables, and are used to build up probabilistic projections for social expenditure as a share of gross domestic product using simulation. Attention is focused on health expenditures which are disaggregated into seven broad classes. In addition, we explore the impacts of alternative hypotheses about future health costs. While it can be predicted with some confidence that overall social expenditures will rise, the results suggest that long‐term planning would be enriched by recognising the distributions around point estimates of projected social costs.     

Is external research assessment associated with convergence or divergence of research quality across universities and disciplines? Evidence from the PBRF process in New Zealand

ABSTRACT

Performance-based research evaluations have been adopted in several countries both to measure research quality in higher education institutions and as a basis for the allocation of funding across institutions. Much attention has been given to evaluating whether such schemes have increased the quality and quantity of research. This paper examines whether the introduction of the New Zealand Performance-Based Research Fund process produced convergence or divergence in measured research quality across universities and disciplines between the 2003 and 2012 assessments. Two convergence measures are obtained. One, referred to as β-convergence, relates to the relationship between changes in average quality and the initial quality level. The second concept, referred to as σ-convergence, relates to the changes in the dispersion in average research quality over time. Average quality scores by discipline and university were obtained from individual researcher data, revealing substantial β- and σ-convergence in research quality over the period. The hypothesis of uniform rates of convergence across almost all universities and disciplines is supported. The results provide insights into the incentives created by performance-based funding schemes.     

The Atkinson Inequality Measure and its Sampling Properties: Bayesian and Classical Approaches

This paper examines several Bayesian methods of obtaining posterior probability density functions of the Atkinson inequality measure and its associated social welfare function, in the context of grouped income distribution data. The methods are compared with asymptotic standard errors. The role of the number of income classes is investigated using a simulated distribution. If only a small number of groups is available in published data, there is a clear gain from generating the posterior probability density function when using an explicit income distribution assumption. Even with a small number of groups, the Bayesian approach gives results that are close to the sample values obtained using the corresponding individual observations.