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Welfare measurement in labour supply models with nonlinear budget constraints

Listed author(s):
  • Ian Walker


    (Keele University, Department of Economics, Keele, Staffordshire ST5 5BG, UK, and IFS, 7 Ridgmount Street, London WC1E 7AE, UK)

  • Ian Preston


    (University College London WC1E 6BT, and IFS, 7 Ridgmount Street, London WC1E 7AE, UK)

This paper is concerned with the measurement of individual welfare in labour supply models which allow for the impact of income taxation and income support schemes on labour supply decisions. The paper is motivated by the concern over the need to have measures which can be interpreted easily, which can be compared with net income, and which can be meaningfully aggregated. To illustrate the issues we use estimates of a discrete choice model of labour supply for United Kingdom lone mothers to compute alternative welfare measures which might be considered as having intuitive appeal to policy-makers. We compute welfare change based on these measures arising from a recent reform of the child support payments system.

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Article provided by Springer & European Society for Population Economics in its journal Journal of Population Economics.

Volume (Year): 12 (1999)
Issue (Month): 3 ()
Pages: 343-361

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Handle: RePEc:spr:jopoec:v:12:y:1999:i:3:p:343-361
Note: Received: 25 February 1997/Accepted: 12 March 1998
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