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How do income-support systems in the UK affect labour force participation?

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  • Brewer, Mike

    ()
    (Institute for Fiscal Studies)

Abstract

This paper reviews how income-support systems affect labour force participation in the UK. The UK’s approach to social insurance is “basic security”, with modest, typically flat-rate, benefits; insurance-based benefits are relatively unimportant. Compared with the EU, the UK has high employment rates, but a high proportion of non-workers say that they are not working through disability. In general, the low generosity of out-of-work benefits means that positive incentives to work exist for almost all benefit recipients, but weak work incentives exist for those receive Housing Benefit, and for primary earners in couples who have low earnings. Recent reforms to strengthen work incentives have altered the in-work tax credits, rather than the benefit system, and recent reforms to the out-of-work benefits have involved toughening and extending job-search requirements. The two main political parties seem to agree that future reforms will involve more conditionality, a greater use of the private sector, and a unification of the different labour market programmes.

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Bibliographic Info

Paper provided by IFAU - Institute for Evaluation of Labour Market and Education Policy in its series Working Paper Series with number 2009:27.

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Length: 64 pages
Date of creation: 22 Dec 2009
Date of revision:
Handle: RePEc:hhs:ifauwp:2009_027

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Related research

Keywords: Institutions; incentives; reforms; labour supply; disability;

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Cited by:
  1. Anders, Forslund & Fredriksson, Peter, 2009. "Income support systems, labour supply incentives and employment – some cross-country evidence," Working Paper Series, Center for Labor Studies 2010:3, Uppsala University, Department of Economics.
  2. Rolf Aaberge & Lennart Flood, 2013. "U.S. versus Sweden. The effect of alternative in-work tax credit policies on labour supply of single mothers," Discussion Papers 761, Research Department of Statistics Norway.

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