Roger Douglas, Robert MacCulloch, 25 May 2017

The future of publicly funded welfare states is in doubt as costs trend upward, yet there is little agreement about the shape of the necessary reforms. This column uses the case of New Zealand to show how tax cuts can be designed to establish compulsory savings accounts so that a publicly funded welfare system can be changed into one that relies largely on private funding. Transparent pricing of services can be introduced, offering the potential for efficiency gains. The government retains sufficient revenues to act as ‘insurer of last resort’ for those individuals unable to meet welfare expenses out of their savings accounts.

John Gibson, David McKenzie, Halahingao Rohorua, Steven Stillman, 26 January 2016

Wage differences across countries offer individuals the possibility of huge wage gains through moving abroad. This column uses data on lottery-selected migrants from Tonga to New Zealand to assess the effect on productivity and wages for workers moving from a poor country to a rich country. These randomly selected workers appear to be immediately more productive, and their wage gains are stable over time. It seems that cross-country wage differences are due to better institutions, higher quality capital, and other factors in rich countries that serve to raise the productivity of all workers, whether natives or migrants.

Hassan Afrouzi, Olivier Coibion, Yuriy Gorodnichenko, Saten Kumar, 13 October 2015

The importance of the general public’s inflation expectations is increasingly being emphasised, but surveys of firms’ expectations are notably absent. This column explores the extent to which inflation expectations of firms in New Zealand are anchored. The findings indicate that managers show little anchoring of inflation expectations, despite 25 years of inflation targeting by the central bank. Most managers depend to a large extent on their personal shopping experience to make inferences about aggregate inflation.

John Gibson, David McKenzie, 13 November 2010

The debate over immigration often highlights the effects on the native population. This column instead looks at the country that immigrants leave behind. It presents a multi-year evaluation of New Zealand’s seasonal migration programme. In its first two years, the main developing countries supplying workers to the programme have seen a large improvement in household wellbeing.