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Housing Subsidies and Work Incentives in Great Britain

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  • Bingley, P.
  • Walker, I.

Abstract

The relationship between housing costs, wages and transfer programmes is complex and yet plays an important part in determining the incentive to work for individuals in low income or high housing cost households. While it is true that many individuals who are in these categories are out of the labour force (retired, sick and disabled), there are many who are not and whose incentive to seek work, or to work harder if already in work, could be modified by directly changing the rent levels they face or indirectly via changes to the structure of programmes designed to subsidize housing for the poor. Here we estimate a static discrete choice labour supply model which allows for housing benefit programme participation. We use samples of 42491 married women and 13340 unmarried women drawn from Great Britain Family Resources Surveys 1994/5-97/8. We find that women are quite responsive to labour supply incentives, housing benefit income has similar incentive effects to earned income which suggests any "stigma" is small. Our analysis is complemented by simulating housing benefit and direct rent subsidy reforms.

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Bibliographic Info

Paper provided by University of Warwick, Department of Economics in its series The Warwick Economics Research Paper Series (TWERPS) with number 559.

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Length: 13 pages
Date of creation: 2000
Date of revision:
Handle: RePEc:wrk:warwec:559

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Keywords: LABOUR ; HOUSING ; COSTS;

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References

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  1. Hausman, Jerry A & Wise, David A, 1978. "A Conditional Probit Model for Qualitative Choice: Discrete Decisions Recognizing Interdependence and Heterogeneous Preferences," Econometrica, Econometric Society, Econometric Society, vol. 46(2), pages 403-26, March.
  2. Arthur van Soest, 1995. "Structural Models of Family Labor Supply: A Discrete Choice Approach," Journal of Human Resources, University of Wisconsin Press, vol. 30(1), pages 63-88.
  3. Moffitt, Robert, 1983. "An Economic Model of Welfare Stigma," American Economic Review, American Economic Association, American Economic Association, vol. 73(5), pages 1023-35, December.
  4. Zabalza, A. & Pissarides, C. & Barton, M., 1980. "Social security and the choice between full-time work, part-time work and retirement," Journal of Public Economics, Elsevier, Elsevier, vol. 14(2), pages 245-276, October.
  5. M. Keane & R. Moffitt, . "A structural model of multiple welfare program participation and labor supply," Institute for Research on Poverty Discussion Papers, University of Wisconsin Institute for Research on Poverty 1080-96, University of Wisconsin Institute for Research on Poverty.
  6. Thomas MaCurdy & David Green & Harry Paarsch, 1990. "Assessing Empirical Approaches for Analyzing Taxes and Labor Supply," Journal of Human Resources, University of Wisconsin Press, vol. 25(3), pages 415-490.
  7. McFadden, Daniel L., 1984. "Econometric analysis of qualitative response models," Handbook of Econometrics, Elsevier, in: Z. Griliches† & M. D. Intriligator (ed.), Handbook of Econometrics, edition 1, volume 2, chapter 24, pages 1395-1457 Elsevier.
  8. Heckman, James & Singer, Burton, 1984. "A Method for Minimizing the Impact of Distributional Assumptions in Econometric Models for Duration Data," Econometrica, Econometric Society, Econometric Society, vol. 52(2), pages 271-320, March.
  9. Butler, J S & Moffitt, Robert, 1982. "A Computationally Efficient Quadrature Procedure for the One-Factor Multinomial Probit Model," Econometrica, Econometric Society, Econometric Society, vol. 50(3), pages 761-64, May.
  10. Moffitt, Robert, 1984. "The Estimation of a Joint Wage-Hours Labor Supply Model," Journal of Labor Economics, University of Chicago Press, University of Chicago Press, vol. 2(4), pages 550-66, October.
  11. Chris Giles & Paul Johnson & Julian McCrae, 1997. "Housing benefit and financial returns to employment for tenants in the social sector," Fiscal Studies, Institute for Fiscal Studies, Institute for Fiscal Studies, vol. 18(1), pages 49-72, February.
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Cited by:
  1. John Creedy & Guyonne Kalb, 2003. "Discrete Hours Labour Supply Modelling: Specification, Estimation and Simulation," Melbourne Institute Working Paper Series, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne wp2003n16, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne.
  2. Sinan Sarpca & Charles Ka Yui Leung & Kuzey Yilmaz, 2010. "Public Housing Units vs. Housing Vouchers: Accessibility, Local Public Goods, and Welfare," Koç University-TUSIAD Economic Research Forum Working Papers, Koc University-TUSIAD Economic Research Forum 1032, Koc University-TUSIAD Economic Research Forum.
  3. Ángel López-Nicolás & Marcos Vera-Hernández, 2002. "Are tax subsidies for private medical insurance self-financing? Evidence from a microsimulation model for outpatient and inpatient episodes," Working Papers, Research Center on Health and Economics, Department of Economics and Business, Universitat Pompeu Fabra 632, Department of Economics and Business, Universitat Pompeu Fabra, revised Oct 2004.
  4. Tim Callan & A. Van Soest & John R. Walsh, 2007. "Tax Structure and Female Labour Market Participation: Evidence from Ireland," Papers, Economic and Social Research Institute (ESRI) WP208, Economic and Social Research Institute (ESRI).
  5. Alex Bryson & Richard B. Freeman, 2010. "To join or not to join? Factors influencing employee share plan membership in a multinational corporation," LSE Research Online Documents on Economics, London School of Economics and Political Science, LSE Library 48915, London School of Economics and Political Science, LSE Library.
  6. Tom Kornstad & Thor Olav Thoresen, 2006. "Effects of Family Policy Reforms in Norway. Results from a Joint Labor Supply and Child Care Choice Microsimulation Analysis," Discussion Papers, Research Department of Statistics Norway 450, Research Department of Statistics Norway.
  7. Ewoudou, Jacques & Tsimpo, Clarence & Wodon, Quentin, 2009. "Stigma and the take-up of social programs," Policy Research Working Paper Series 4962, The World Bank.

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