This file is part of IDEAS, which uses RePEc data


[ Papers | Articles | Software | Books | Chapters | Authors | Institutions | JEL Classification | NEP reports | Search | New papers by email | Author registration | Rankings | Volunteers | FAQ | Blog | Help! ]

The Impact of Tax Credits on Labour Supply

Author info | Abstract | Publisher info | Download info | Related research | Statistics
Author Info
Ghazala Azmat ()
Abstract

One of the principle aims of the Working Families' Tax Credit in the UK was to increase the participation of those with low labour market attachment. The literature to date concludes that for lone mothers there was approximately a 5% point increase in employment. The differences-in-differences methodology that is typically used compare lone mother with single women without children. However, the characteristics of these groups are both observably and unobservably different, such that the identifying assumption may not be satisfied. We find that when we control for differential trends between people with and without children, the employment effect of Working Families' Tax Credit falls significantly. Moreover, by looking at movements in the hour's distribution, it is clear that any Working Families' Tax Credit effect is solely borne on those working full-time (30 hours or more). Another concern is that we find that the policy did not induce people into the labour market from inactivity.

Download Info
To download:

If you experience problems downloading a file, check if you have the proper application to view it first. Information about this may be contained in the File-Format links below. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL: http://www.econ.upf.edu/docs/papers/downloads/979.pdf
File Format: application/pdf
File Function: Whole Paper
Download Restriction: no

Publisher Info
Paper provided by Department of Economics and Business, Universitat Pompeu Fabra in its series Economics Working Papers with number 979.

Download reference. The following formats are available: HTML (with abstract), plain text (with abstract), BibTeX, RIS (EndNote, RefMan, ProCite), ReDIF
Length:
Date of creation: Oct 2006
Date of revision:
Handle: RePEc:upf:upfgen:979

Contact details of provider:
Web page: http://www.econ.upf.edu/

For technical questions regarding this item, or to correct its listing, contact: ().

Related research
Keywords: Tax Credits; Differences-in-differences; Lone Mothers;

Find related papers by JEL classification:
H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies
I38 - Health, Education, and Welfare - - Welfare and Poverty - - - Government Programs; Provision and Effects of Welfare Programs
C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: General - - - Semiparametric and Nonparametric Methods
J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply

This paper has been announced in the following NEP Reports:

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Francesconi, Marco & van der Klaauw, Wilbert, 2004. "The Consequences of ‘In-Work’ Benefit Reform in Britain: New Evidence from Panel Data," IZA Discussion Papers 1248, Institute for the Study of Labor (IZA). [Downloadable!]
  2. Mike Brewer & Tom Clark & Matthew Wakefield, 2002. "Five years of social security reforms in the UK," IFS Working Papers W02/12, Institute for Fiscal Studies. [Downloadable!]
  3. Richard Dickens & Alan Manning, 2002. "Has The National Minimum Wage Reduced UK Wage Inequality?," CEP Discussion Papers dp0533, Centre for Economic Performance, LSE. [Downloadable!]
    Other versions:
  4. Paul Gregg & Susan Harkness & Sarah Smith, 2007. "Welfare Reform and Lone Parents in the UK," The Centre for Market and Public Organisation 07/182, Department of Economics, University of Bristol, UK. [Downloadable!]
    Other versions:
  5. 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. [Downloadable!]
  6. Andrew Leigh, 2005. "Optimal Design of Earned Income Tax Credits: Evidence from a British Natural Experiment," CEPR Discussion Papers 488, Centre for Economic Policy Research, Research School of Social Sciences, Australian National University. [Downloadable!]
  7. Duncan, Alan & Giles, Christopher, 1996. "Labour Supply Incentives and Recent Family Credit Reforms," Economic Journal, Royal Economic Society, vol. 106(434), pages 142-55, January. [Downloadable!] (restricted)
Full references

Statistics
Access and download statistics

Did you know? You too can volunteer for RePEc, for example by providing information about publications in your institution.

This page was last updated on 2009-11-27.

This information is provided to you by IDEAS at the Department of Economics, College of Liberal Arts and Sciences, University of Connecticut using RePEc data on a server sponsored by the Society for Economic Dynamics.