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Comparing in-work benefits and the reward to work for families with children in the US and the UK

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Author Info
Mike Brewer () (Institute for Fiscal Studies)

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Abstract

The income transfer systems for low-income families in the US and the UK try both to reduce poverty and to encourage work. In-work benefits are a key part of both countries' strategies through the earned income tax credit and the working families' tax credit (and predecessors) respectively. But tax credits are only one part of the whole tax and welfare system. In-work benefits, taxes and welfare benefits combine in both countries to provide good financial incentives for lone parents to do minimum-wage work, but poorer incentives to increase earnings further. But direct comparisons of budget constraints hide important points of detail. First, not enough is known about what determines take-up of in-work benefits. Second, the considerable differences in assessment and payment mechanisms and frequency between EITC and WFTC mean that low-income families in the US and the UK may respond very differently to apparently similar financial incentives.

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Publisher Info
Article provided by Institute for Fiscal Studies in its journal Fiscal Studies.

Volume (Year): 22 (2001)
Issue (Month): 1 (January)
Pages: 41-77
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Handle: RePEc:ifs:fistud:v:22:y:2001:i:1:p:41-77

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Related research
Keywords: welfare-to-work; New Deal; tax credits; in-work benefits;

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References listed on IDEAS
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. Rebecca M. Blank, David Card and Philip K. Robins, 1999. "Financial Incentives for Increasing Work and Income Among Low-Income Families," Economics Working Papers E99-264, University of California at Berkeley. [Downloadable!]
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Full references

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. Paul Gregg & Maria Gutierrez-Domenech & Jane Waldfogel, 2003. "The Employment of Married Mothers in Great Britain: 1974-2000," CEP Discussion Papers dp0596, Centre for Economic Performance, LSE. [Downloadable!]
    Other versions:
  2. Mike Brewer & Paul Gregg, 2002. "Eradicating Child Poverty in Britain: Welfare Reform and Children Since 1997," The Centre for Market and Public Organisation 02/052, Department of Economics, University of Bristol, UK. [Downloadable!]
    Other versions:
  3. James Banks & Mike Brewer, 2002. "Understanding the relative generosity of government financial support for families with children," IFS Working Papers W02/02, Institute for Fiscal Studies. [Downloadable!]
  4. Richard Blundell & Mike Brewer & Marco Francesconi, 2005. "Job changes, hours changes and the path of labour supply adjustment," IFS Working Papers W05/21, Institute for Fiscal Studies. [Downloadable!]
  5. Mike Brewer & Tom Clark & Matthew Wakefield, 2002. "Five years of social security reforms in the UK," IFS Working Papers W02/12, Institute for Fiscal Studies. [Downloadable!]
  6. Richard Blundell & Mike Brewer & Marco Francesconi, 2007. "Job Changes and Hours Changes: Understanding the Path of Labour Supply Adjustment," IZA Discussion Papers 3044, Institute for the Study of Labor (IZA). [Downloadable!]
    Other versions:
  7. Lydon, Reamonn & Walker, Ian, 2004. "Welfare-to-Work, Wages and Wage Growth," IZA Discussion Papers 1144, Institute for the Study of Labor (IZA). [Downloadable!]
    Other versions:
  8. Richard Blundell & Andrew Shephard, 2008. "Employment, hours of work and the optimal design of earned income tax credits," IFS Working Papers W08/01, Institute for Fiscal Studies. [Downloadable!]
  9. Mike Brewer & Tom Clark, 2002. "The impact on incentives of five years of social security reform in the UK," IFS Working Papers W02/14, Institute for Fiscal Studies. [Downloadable!]
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