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The Effects of In-Work Benefit Reform in Britain on Couples: Theory and Evidence

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Author Info
Marco Francesconi
Helmut Rainer
Wilbert vanderKlaauw

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Abstract

This article develops a simple model of household decisions that explicitly accounts for the role played by the Working Families' Tax Credit (WFTC) to examine its effects on couples in Britain. The main implications of the model are tested using panel data from the British Household Panel Survey collected between 1991 and 2002. Overall, the financial incentives of the reform had small and statistically insignificant effects on a wide range of married mothers' decisions. Women's responses, however, were highly heterogeneous, depending on their partners' labour supply and earnings. Copyright © The Author(s). Journal compilation © Royal Economic Society 2009.

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File URL: http://www.blackwell-synergy.com/doi/abs/10.1111/j.1468-0297.2008.02225.x
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Publisher Info
Article provided by Royal Economic Society in its journal The Economic Journal.

Volume (Year): 119 (2009)
Issue (Month): 535 (02)
Pages: F66-F100
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Handle: RePEc:ecj:econjl:v:119:y:2009:i:535:p:f66-f100

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Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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  2. Del Boca, Daniela & Flinn, Christopher J, 1995. "Rationalizing Child-Support Decisions," American Economic Review, American Economic Association, vol. 85(5), pages 1241-62, December. [Downloadable!] (restricted)
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  3. Richard Blundell & Pierre-Andre Chiappori & Thierry Magnac & Costas Meghir, 2007. "Collective Labour Supply: Heterogeneity and Non-Participation," Review of Economic Studies, Blackwell Publishing, vol. 74(2), pages 417-445, 04. [Downloadable!] (restricted)
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  4. V. Joseph Hotz & John Karl Scholz, 2001. "The Earned Income Tax Credit," NBER Working Papers 8078, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  5. John Ermisch & Chiara Pronzato, 2008. "Intra-Household Allocation of Resources: Inferences from Non-resident Fathers' Child Support Payments," Economic Journal, Royal Economic Society, vol. 118(527), pages 347-362, 03. [Downloadable!] (restricted)
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  6. Marco Francesconi & Wilbert van der Klaauw, 2007. "The Socioeconomic Consequences of "In-Work" Benefit Reform for British Lone Mothers," Journal of Human Resources, University of Wisconsin Press, vol. 42(1). [Downloadable!] (restricted)
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  8. Richard Blundell & Alan Duncan & Julian McCrae & Costas Meghir, 2000. "The labour market impact of the working families’ tax credit," Fiscal Studies, Institute for Fiscal Studies, vol. 21(1), pages 75-103, March. [Downloadable!]
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  12. Blundell, Richard, 2001. "Welfare Reform for Low Income Workers," Oxford Economic Papers, Oxford University Press, vol. 53(2), pages 189-214, April.
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  14. Marianne P. Bitler & Jonah B. Gelbach & Hilary W. Hoynes & Madeline Zavodny, 2002. "The impact of welfare reform on marriage and divorce," Working Paper 2002-9, Federal Reserve Bank of Atlanta. [Downloadable!]
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  15. Paul Gregg & Jane Waldfogel, 2005. "Introduction," Economic Journal, Royal Economic Society, vol. 115(501), pages F1-F6, 02. [Downloadable!] (restricted)
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  19. Eissa, Nada & Hoynes, Hilary Williamson, 2004. "Taxes and the labor market participation of married couples: the earned income tax credit," Journal of Public Economics, Elsevier, vol. 88(9-10), pages 1931-1958, August. [Downloadable!] (restricted)
  20. Clark, Simon, 1999. "Law, Property, and Marital Dissolution," Economic Journal, Royal Economic Society, vol. 109(454), pages C41-54, March. [Downloadable!] (restricted)
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  21. Richard Blundell & Pierre-André Chiappori & Costas Meghir, 2005. "Collective Labor Supply with Children," Journal of Political Economy, University of Chicago Press, vol. 113(6), pages 1277-1306, December. [Downloadable!] (restricted)
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  22. Weiss, Yoram & Willis, Robert J, 1985. "Children as Collective Goods and Divorce Settlements," Journal of Labor Economics, University of Chicago Press, vol. 3(3), pages 268-92, July. [Downloadable!] (restricted)
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  24. Flinn, Christopher J, 2000. "Modes of Interaction between Divorced Parents," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 41(3), pages 545-78, August.
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  25. Iyigun, Murat & Walsh, Randall P., 2007. "Endogenous gender power, household labor supply and the demographic transition," Journal of Development Economics, Elsevier, vol. 82(1), pages 138-155, January. [Downloadable!] (restricted)
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Jeffrey Grogger & Lynn Karoly, 2007. "The Effects of Work-Conditioned Transfers on Marriage and Child Well-Being: A Review," NBER Working Papers 13485, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  2. Francesconi, Marco & Rainer, Helmut & van der Klaauw, Wilbert, 2008. "Unintended Consequences of Welfare Reform: The Case of Divorced Parents," IZA Discussion Papers 3891, Institute for the Study of Labor (IZA). [Downloadable!]
    Other versions:
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