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Welfare measurement in labour supply models with nonlinear budget constraints

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Author Info
Ian Walker () (Keele University, Department of Economics, Keele, Staffordshire ST5 5BG, UK, and IFS, 7 Ridgmount Street, London WC1E 7AE, UK)
Ian Preston () (University College London WC1E 6BT, and IFS, 7 Ridgmount Street, London WC1E 7AE, UK)

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Abstract

This paper is concerned with the measurement of individual welfare in labour supply models which allow for the impact of income taxation and income support schemes on labour supply decisions. The paper is motivated by the concern over the need to have measures which can be interpreted easily, which can be compared with net income, and which can be meaningfully aggregated. To illustrate the issues we use estimates of a discrete choice model of labour supply for United Kingdom lone mothers to compute alternative welfare measures which might be considered as having intuitive appeal to policy-makers. We compute welfare change based on these measures arising from a recent reform of the child support payments system.

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Publisher Info
Article provided by Springer in its journal Journal of Population Economics.

Volume (Year): 12 (1999)
Issue (Month): 3 ()
Pages: 343-361
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Handle: RePEc:spr:jopoec:v:12:y:1999:i:3:p:343-361

Note: Received: 25 February 1997/Accepted: 12 March 1998
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Related research
Keywords: Welfare measurement · labour supply · lone parents;

Other versions of this item:

Find related papers by JEL classification:
I30 - Health, Education, and Welfare - - Welfare and Poverty - - - General
I38 - Health, Education, and Welfare - - Welfare and Poverty - - - Government Programs; Provision and Effects of Welfare Programs
C25 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Discrete Regression and Qualitative Choice Models
J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply

Cited by:
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  1. Keshab Bhattarai & John Whalley, 1997. "Discreteness and the Welfare Cost of Labor Supply Tax Distortions," NBER Working Papers 6280, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  2. Tom Kornstad and Thor Olav Thoresen, 2006. "Effects of Family Policy Reforms in Norway. Results from a Joint Labor Supply and Child Care Choice Microsimulation Analysis," Discussion Papers 450, Research Department of Statistics Norway. [Downloadable!]
  3. John Creedy & Nicolas Herault & Guyonne Kalb, 2008. "Comparing Welfare Change Measures withIncome Change Measures in Behavioural Policy Simulations," Department of Economics - Working Papers Series 1030, The University of Melbourne. [Downloadable!]
    Other versions:
  4. Flood, Lennart & Pylkkänen, Elina & Wahlberg, Roger, 2003. "From Welfare to Work: Evaluating a Proposed Tax and Benefit Reform Targeted at Single Mothers in Sweden," IZA Discussion Papers 891, Institute for the Study of Labor (IZA). [Downloadable!]
    Other versions:
  5. Ian Walker & Gillian Paull & Yu Zhu, 2000. "Child support reform: some analysis of the 1999 White Paper," Fiscal Studies, Institute for Fiscal Studies, vol. 21(1), pages 105-140, March. [Downloadable!]
    Other versions:
  6. Nada Eissa & Henrik Jacobsen Kleven & Claus Thustrup Kreiner, 2004. "Evaluation of Four Tax Reforms in the United States: Labor Supply and Welfare Effects for Single Mothers," NBER Working Papers 10935, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  7. Gerhard Wagenhals, 2000. "Incentive and Redistribution Effects of the German Tax Reform 2000," Diskussionspapiere aus dem Institut für Volkswirtschaftslehre der Universität Hohenheim 188/2000, Department of Economics, University of Hohenheim, Germany. [Downloadable!]
    Other versions:
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