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The impact of a time-limited, targeted in-work benefit in the medium-term: an evaluation of In Work Credit

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  • Mike Brewer

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

  • James Browne

    ()
    (Institute for Fiscal Studies)

  • Haroon Chowdry

    ()
    (Institute for Fiscal Studies)

  • Claire Crawford

    ()
    (Institute for Fiscal Studies)

Abstract

Conventional in-work benefits or tax credits are now well established as a policy instrument for increasing labour supply and tackling poverty. A different sort of in-work credit is one where the payments are time-limited, conditional on previous receipt of welfare, and, perhaps, not means-tested. Such a design is cheaper, and perhaps better targeted, but potentially less effective. Using administrative data, this paper evaluates one such policy for lone parents in the UK which was piloted in around one third of the country. It finds that the policy did increase flows off welfare and into work, and that these positive effects did not diminish after recipients reached the 12 month time-limit for receiving the supplement. Most of the impact arose by speeding up welfare off-flows: the job retention of programme recipients was good, but this cannot be attributed to the programme itself.

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Bibliographic Info

Paper provided by Institute for Fiscal Studies in its series IFS Working Papers with number W11/14.

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Date of creation: Aug 2011
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Handle: RePEc:ifs:ifsewp:11/14

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Keywords: In-work benefits; labour supply; time-limits; welfare; lone parents.;

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  1. Heckman, James J & Ichimura, Hidehiko & Todd, Petra E, 1997. "Matching as an Econometric Evaluation Estimator: Evidence from Evaluating a Job Training Programme," Review of Economic Studies, Wiley Blackwell, vol. 64(4), pages 605-54, October.
  2. Ham, John C & LaLonde, Robert J, 1996. "The Effect of Sample Selection and Initial Conditions in Duration Models: Evidence from Experimental Data on Training," Econometrica, Econometric Society, vol. 64(1), pages 175-205, January.
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