Did Working Families' Tax Credit Work? The Impact of In-Work support on Labour Supply in Great Britain
In-work benefits are promoted as a way to make low-income families better off without introducing adverse work incentives. In 1999, the structure of in-work benefits in the UK changed, and their generosity almost doubled, through the introduction of Working Families’ Tax Credit (WFTC). With micro...
| Main Authors: | , , , |
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| Format: | Journal Article |
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Elsevier BV * North-Holland
2006
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| Online Access: | http://hdl.handle.net/20.500.11937/8376 |
| _version_ | 1848745640290418688 |
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| author | Brewer, M. Duncan, Alan Shephard, A. Suarez, M. |
| author_facet | Brewer, M. Duncan, Alan Shephard, A. Suarez, M. |
| author_sort | Brewer, M. |
| building | Curtin Institutional Repository |
| collection | Online Access |
| description | In-work benefits are promoted as a way to make low-income families better off without introducing adverse work incentives. In 1999, the structure of in-work benefits in the UK changed, and their generosity almost doubled, through the introduction of Working Families’ Tax Credit (WFTC). With micro-data from before and after its introduction, a structural model of labour supply and programme participation estimates that, by 2002, WFTC had increased labour supply of lone mothers by around 5.1 percentage points, slightly reduced labour supply of mothers in couples by 0.6 percentage points, and increased the labour supply of fathers in couples by 0.8 percentage points, compared with the programme that preceded it. Other tax and benefit reforms contemporaneous with WFTC acted to reduce the labour supply of parents, though. Without any form of in-work benefit in the UK, labour force participation by lone mothers would be around 45 percent, rather than the 55 per cent we now observe. Participating in family credit, the UK’s in-work programme before October 1999, conferred a utility loss as well as a utility gain from the extra income, but this utility cost of participation was lower in the final year of WFTC than under previous programmes for lone mothers, and no different for individuals in couples: this in itself induced more lone mothers to work. |
| first_indexed | 2025-11-14T06:20:34Z |
| format | Journal Article |
| id | curtin-20.500.11937-8376 |
| institution | Curtin University Malaysia |
| institution_category | Local University |
| last_indexed | 2025-11-14T06:20:34Z |
| publishDate | 2006 |
| publisher | Elsevier BV * North-Holland |
| recordtype | eprints |
| repository_type | Digital Repository |
| spelling | curtin-20.500.11937-83762017-02-28T01:31:58Z Did Working Families' Tax Credit Work? The Impact of In-Work support on Labour Supply in Great Britain Brewer, M. Duncan, Alan Shephard, A. Suarez, M. Working Families’ Tax Credit Discrete choice Microsimulation Take-up Labour supply In-work benefits are promoted as a way to make low-income families better off without introducing adverse work incentives. In 1999, the structure of in-work benefits in the UK changed, and their generosity almost doubled, through the introduction of Working Families’ Tax Credit (WFTC). With micro-data from before and after its introduction, a structural model of labour supply and programme participation estimates that, by 2002, WFTC had increased labour supply of lone mothers by around 5.1 percentage points, slightly reduced labour supply of mothers in couples by 0.6 percentage points, and increased the labour supply of fathers in couples by 0.8 percentage points, compared with the programme that preceded it. Other tax and benefit reforms contemporaneous with WFTC acted to reduce the labour supply of parents, though. Without any form of in-work benefit in the UK, labour force participation by lone mothers would be around 45 percent, rather than the 55 per cent we now observe. Participating in family credit, the UK’s in-work programme before October 1999, conferred a utility loss as well as a utility gain from the extra income, but this utility cost of participation was lower in the final year of WFTC than under previous programmes for lone mothers, and no different for individuals in couples: this in itself induced more lone mothers to work. 2006 Journal Article http://hdl.handle.net/20.500.11937/8376 Elsevier BV * North-Holland restricted |
| spellingShingle | Working Families’ Tax Credit Discrete choice Microsimulation Take-up Labour supply Brewer, M. Duncan, Alan Shephard, A. Suarez, M. Did Working Families' Tax Credit Work? The Impact of In-Work support on Labour Supply in Great Britain |
| title | Did Working Families' Tax Credit Work? The Impact of In-Work support on Labour Supply in Great Britain |
| title_full | Did Working Families' Tax Credit Work? The Impact of In-Work support on Labour Supply in Great Britain |
| title_fullStr | Did Working Families' Tax Credit Work? The Impact of In-Work support on Labour Supply in Great Britain |
| title_full_unstemmed | Did Working Families' Tax Credit Work? The Impact of In-Work support on Labour Supply in Great Britain |
| title_short | Did Working Families' Tax Credit Work? The Impact of In-Work support on Labour Supply in Great Britain |
| title_sort | did working families' tax credit work? the impact of in-work support on labour supply in great britain |
| topic | Working Families’ Tax Credit Discrete choice Microsimulation Take-up Labour supply |
| url | http://hdl.handle.net/20.500.11937/8376 |