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Job changes, hours changes and the path of labour supply adjustment

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Author Info

  • Richard Blundell

    ()
    (Institute for Fiscal Studies and University College London)

  • Mike Brewer

    ()
    (Institute for Fiscal Studies and ISER, Essex University)

  • Marco Francesconi

    (Institute for Fiscal Studies and ISER, Essex University)

Abstract

This paper uses the first twelve waves of the British Household Panel Survey covering the period 1991-2002 to investigate single women's labour supply changes in response to three tax and benefit policy reforms that occurred in the 1990s. We find evidence of small labour supply effects for two of such reforms. A third reform in 1999 instead led to a significant increase in single mothers' hours of work. This increase was primarily driven by women who changed job, suggesting that labour supply adjustments within a job are harder than across jobs. The presence of hours inflexibility within jobs and labour supply adjustments through job mobility are strongly confirmed when we look at hours changes by stated labour supply preferences. Finally, we find little overall effect on wages.

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Bibliographic Info

Paper provided by Institute for Fiscal Studies in its series IFS Working Papers with number W05/21.

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Length: 35 pp.
Date of creation: Oct 2005
Date of revision:
Handle: RePEc:ifs:ifsewp:05/21

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Related research

Keywords: Job mobility; Hours flexibility; Labour supply preferences; Hours-wage trade-off; Monopsony;

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References

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  1. Bruce D. Meyer & Dan T. Rosenbaum, 2001. "Welfare, The Earned Income Tax Credit, And The Labor Supply Of Single Mothers," The Quarterly Journal of Economics, MIT Press, vol. 116(3), pages 1063-1114, August.
  2. Joseph G. Altonji & Christina H. Paxson, 1990. "Labor Supply, Hours Constraints and Job Mobility," NBER Working Papers 3474, National Bureau of Economic Research, Inc.
  3. Claudia Goldin & Lawrence F. Katz, 1998. "The Origins Of Technology-Skill Complementarity," The Quarterly Journal of Economics, MIT Press, vol. 113(3), pages 693-732, August.
  4. Stewart, M.B. & Swaffield, J.K., 1996. "Constraints on the Desired Hours of Work of British Men," The Warwick Economics Research Paper Series (TWERPS) 468, University of Warwick, Department of Economics.
  5. Paul Gregg & Susan Harkness, 2003. "Welfare Reform and Lone Parents Employment in the UK," The Centre for Market and Public Organisation 03/072, Department of Economics, University of Bristol, UK.
  6. Stewart, Mark B. & Swaffield, Joanna K., 2006. "The other margin : do minimum wages cause working hours adjustments for low-wage workers?," The Warwick Economics Research Paper Series (TWERPS) 746, University of Warwick, Department of Economics.
  7. Dickens, William T & Lundberg, Shelly J, 1993. "Hours Restrictions and Labor Supply," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 34(1), pages 169-92, February.
  8. Shelly J. Lundberg, 1984. "Tied Wage-Hours Offers and the Endogeneity of Wages," NBER Working Papers 1431, National Bureau of Economic Research, Inc.
  9. Ham, John C, 1982. "Estimation of a Labour Supply Model with Censoring Due to Unemployment and Underemployment," Review of Economic Studies, Wiley Blackwell, vol. 49(3), pages 335-54, July.
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  12. Bingley, Paul & Walker, Ian, 1997. "The Labour Supply, Unemployment and Participation of Lone Mothers in In-Work Transfer Programmes," Economic Journal, Royal Economic Society, vol. 107(444), pages 1375-90, September.
  13. Kahn, Shulamit & Lang, Kevin, 1991. "The Effect of Hours Constraints on Labor Supply Estimates," The Review of Economics and Statistics, MIT Press, vol. 73(4), pages 605-11, November.
  14. 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).
  15. Rosen, Harvey S, 1976. "Taxes in a Labor Supply Model with Joint Wage-Hours Determination," Econometrica, Econometric Society, vol. 44(3), pages 485-507, May.
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  17. James Heckman & Hidehiko Ichimura & Jeffrey Smith & Petra Todd, 1998. "Characterizing Selection Bias Using Experimental Data," Econometrica, Econometric Society, vol. 66(5), pages 1017-1098, September.
  18. Mike Brewer, 2001. "Comparing in-work benefits and the reward to work for families with children in the US and the UK," Fiscal Studies, Institute for Fiscal Studies, vol. 22(1), pages 41-77, January.
  19. Moffitt, Robert, 1984. "The Estimation of a Joint Wage-Hours Labor Supply Model," Journal of Labor Economics, University of Chicago Press, vol. 2(4), pages 550-66, October.
  20. 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.
  21. Richard Blundell & Thomas MaCurdy, 1998. "Labour supply: a review of alternative approaches," IFS Working Papers W98/18, Institute for Fiscal Studies.
  22. Barzel, Yoram, 1973. "The Determination of Daily Hours and Wages," The Quarterly Journal of Economics, MIT Press, vol. 87(2), pages 220-38, May.
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Citations

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Cited by:
  1. Mary Gregory & Sara Connolly, 2007. "Moving Down: Women`s Part-time Work and Occupational Change in Britain 1991-2001," Economics Series Working Papers 359, University of Oxford, Department of Economics.
  2. Yin King Fok & Sung-Hee Jeon & Roger Wilkins, 2009. "Does Part-Time Employment Help or Hinder Lone Mothers Movements into Full-Time Employment?," Melbourne Institute Working Paper Series wp2009n25, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne.
  3. Nadia Steiber, 2008. ""How Many Hours Would you Want to Work a Week?": Job Quality and the Omitted Variables Bias in Labour Supply Models," SOEPpapers on Multidisciplinary Panel Data Research 121, DIW Berlin, The German Socio-Economic Panel (SOEP).

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