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Abstract

This paper investigates the employment impact of a new tax-credit programme that was put in place in France in 2001. We study the introduction of both this measure and a later reform in 2004 that made the tax credit cashable in advance upon returning to work. We adopt a non-experimental evaluation method. The data for the analysis are drawn from the French Labour Force Surveys over the period 1999 to 2005. Due to the break in the French LFS series in 2003, we analyze separately the two periods 1999-2002 and 2003-05, as well as pooling the data over 1999-2005, under particular assumptions. We find evidence of a significantly negative employment effect for married women, with a reduction of about 3.2-3.4 percentage points in their employment rate after the introduction of the policy. The impact is positive and weakly significant for cohabiting women, while positive but statistically insignificant for lone mothers. We do not find any evidence of an additional effect of the tax credit due to the cashable advance credit reform of 2004.

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File URL: http://www.ofce.sciences-po.fr/pdf/dtravail/WP2007-33.pdf
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Bibliographic Info

Paper provided by Observatoire Francais des Conjonctures Economiques (OFCE) in its series Documents de Travail de l'OFCE with number 2007-33.

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Date of creation: 2007
Date of revision:
Handle: RePEc:fce:doctra:0733

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Web page: http://www.ofce.sciences-po.fr/
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Related research

Keywords: policy evaluation; difference-in-differences estimator; labour supply;

Other versions of this item:

Find related papers by JEL classification:

• C34 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Truncated and Censored Models; Switching Regression Models
• I38 - Health, Education, and Welfare - - Welfare and Poverty - - - Government Programs; Provision and Effects of Welfare Programs
• J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure

This paper has been announced in the following NEP Reports:

• NEP-ALL-2008-01-26 (All new papers)
• NEP-EEC-2008-01-26 (European Economics)
• NEP-LAB-2008-01-26 (Labour Economics)

References

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1. Gabor Kezdi, 2005. "Robus Standard Error Estimation in Fixed-Effects Panel Models," Econometrics 0508018, EconWPA.
2. Marianne Bertrand & Esther Duflo & Sendhil Mullainathan, 2004. "How Much Should We Trust Differences-in-Differences Estimates?," The Quarterly Journal of Economics, MIT Press, vol. 119(1), pages 249-275, February.
   
   • Marianne Bertrand & Esther Duflo & Sendhil Mullainathan, 2002. "How Much Should We Trust Differences-in-Differences Estimates?," NBER Working Papers 8841, National Bureau of Economic Research, Inc.
3. Stewart, Mark B., 2002. "The Impact of the Introduction of the UK Minimum Wage on the Employment Probabilities of Low Wage Workers," Royal Economic Society Annual Conference 2002 169, Royal Economic Society.
   
   • Mark B. Stewart, 2004. "The Impact of the Introduction of the U.K. Minimum Wage on the Employment Probabilities of Low-Wage Workers," Journal of the European Economic Association, MIT Press, vol. 2(1), pages 67-97, 03.
   • Stewart, Mark B., 2002. "The Impact Of The Introduction Of The Uk Minimum Wage On The Employment Probabilities Of Low Wage Workers," The Warwick Economics Research Paper Series (TWERPS) 630, University of Warwick, Department of Economics.
4. Olivier Donni & Nicolas Moreau, 2005. "Collective Labor Supply: a Single-Equation Model and Some Evidence from French Data," Cahiers de recherche 0516, CIRPEE.
   
   • Olivier Donni & Nicolas Moreau, 2007. "Collective Labor Supply: A Single-Equation Model and Some Evidence from French Data," Journal of Human Resources, University of Wisconsin Press, vol. 42(1).
5. V. Joseph Hotz, 2003. "The Earned Income Tax Credit," NBER Chapters, in: Means-Tested Transfer Programs in the United States, pages 141-198 National Bureau of Economic Research, Inc.
   
   • V. Joseph Hotz & John Karl Scholz, 2001. "The Earned Income Tax Credit," NBER Working Papers 8078, National Bureau of Economic Research, Inc.
6. Richard Blundell & Hilary W. Hoynes, 2004. "Has 'In-Work' Benefit Reform Helped the Labor Market?," NBER Chapters, in: Seeking a Premier Economy: The Economic Effects of British Economic Reforms, 1980-2000, pages 411-460 National Bureau of Economic Research, Inc.
   
   • Hilary Hoynes & Richard Blundell, 2001. "Has "In-Work" Benefit Reform Helped the Labour Market?," NBER Working Papers 8546, National Bureau of Economic Research, Inc.
7. Stancanelli, Elena & Sterdyniak, Henri, 2004. "bilan des études sur la prime pour l'emploi," Open Access publications from Sciences Po info:hdl:2441/5270, Sciences Po.
8. Marianne P. Bitler & Jonah B. Gelbach & Hilary W. Hoynes & Madeline Zavodny, 2004. "The Impact of Welfare Reform on Marriage and Divorce," Working Papers 110, RAND Corporation Publications Department.
   
   • Marianne Bitler & Jonah Gelbach & Hilary Hoynes & Madeline Zavodny, 2004. "The impact of welfare reform on marriage and divorce," Demography, Springer, vol. 41(2), pages 213-236, May.
   • 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.
9. Blundell, Richard William & Costa Dias, Monica & Meghir, Costas & Van Reenen, John, 2003. "Evaluating the Employment Impact of a Mandatory Job Search Programme," CEPR Discussion Papers 3786, C.E.P.R. Discussion Papers.
   
   • Richard Blundell & Monica Costa Dias & Costas Meghir & John Van Reenen, 2004. "Evaluating the Employment Impact of a Mandatory Job Search Program," Journal of the European Economic Association, MIT Press, vol. 2(4), pages 569-606, 06.
   • Blundell, R. & Costa-Dias, M. & Meghir, C. & van Reenen, J., 2004. "Evaluating the employment impact of a mandatory job search program," Open Access publications from University College London http://discovery.ucl.ac.u, University College London.
10. Stephen R. G. Jones & W. Craig Riddell, 2006. "Unemployment and Nonemployment: Heterogeneities in Labor Market States," The Review of Economics and Statistics, MIT Press, vol. 88(2), pages 314-323, May.
    
    • Stephen R.G. Jones & W. Craig Riddell, 2002. "Unemployment and Non-Employment: Heterogeneities in Labour Market States," Department of Economics Working Papers 2002-05, McMaster University.
11. François Bourguignon & Thierry Magnac, 1990. "Labor Supply and Taxation in France," Journal of Human Resources, University of Wisconsin Press, vol. 25(3), pages 358-389.
12. Mark B. Stewart, 2004. "The employment effects of the national minimum wage," Economic Journal, Royal Economic Society, vol. 114(494), pages C110-C116, 03.
13. Richard Blundell & Monica Costa Dias & Costas Meghir & John Van Reenen, 2001. "Evaluating the employment impact of a mandatory job search assistance program," IFS Working Papers W01/20, Institute for Fiscal Studies.
14. Elena Stancanelli, 2007. "Marriage and Work: an analysis for French couples in the last decade," Documents de Travail de l'OFCE 2007-10, Observatoire Francais des Conjonctures Economiques (OFCE).

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