Labour’s $60-a-week child payment scheme may produce less work and more babies, economists say.
The scheme, announced on Monday, may put some average wage-earners off working more hours because they will lose two-thirds of every extra dollar they earn through a combination of reduced child payments, tax, ACC and KiwiSaver payments.
But Canterbury University economist Dr Eric Crampton said it would also raise New Zealand’s fertility rate.
“Some people will be thinking, can we afford to have another kid, and just deciding at the margin, no we can’t,” he said. “This extra bit could be enough to do it.”
Now, I agree with Eric on this second point. That’s why I think all the rhetoric from people like DPF has been counterproductive for National: its a policy that might give middle-class voters the freedom to have another child and they’re ranting about sluts breeding for cash.
But this stuff about ‘average wage earners’ turning down work because of marginal tax rates etc? Models in which workers make rational decisions based on perfect information and work more/less in response to proposed policy is standard economist stuff and gets trotted out all the time – but how many actually existing jobs in the modern 21st century economy pay wages and let workers set their own hours? Economist lecturers certainly don’t get paid like that. They’re on salaries! And lower income workers who do get paid by the hour tend to work on a ‘whenever the boss tells you to’ basis. I mean, I’m sure there are some wage jobs out there for part-time Mums who get to set their own hours and will make a rational decision to work less because of higher marginal tax rates but I’d like to see some actual stats on whether those jobs even constitute, say, 0.1% of the workforce before we start speculating that it will impact on the entire country’s productivity rate.