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Welfare Reform and Lone Parents Employment in the UK

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  • Paul Gregg
  • Susan Harkness

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Abstract

The last thirty years saw dramatic increases in the employment rates of married/co-habiting mothers in the UK. Yet the employment rates of lone mothers were lower in the early 1990s than in the late 1970s, at just under 40 percent; and 25 percentage points lower than those of married mothers. In 1997 the incoming Labour government initiated a series of policy reforms aimed at reducing child poverty. A key element of their strategy was a move towards increasing employment rates among families with children. This paper evaluates how this package of policy reform impacted on lone parents employment. We use propensity score matching to construct a benchmark sample and then apply difference-in-difference estimation techniques to assess what would have happened to lone parents employment in the absence of policy reform. Our results show that, of the 11-percentage point rise in the rate of employment of lone parents between 1992 and 2002, 5-percentage points can be attribute to policy reform. This increase in employment occurred in-spite of significant rises in the level of support for non-working lone parents claiming Income Support. This is in sharp contrast to the experience of the USA, where welfare generosity did not increase and time limits and mandatory job search were employed alongside tax credits to get lone parents back to work. In the UK, further substantive policy changes are currently being phased in and so it is probable that there will be further employment gains for lone parents over the next few years. Even so, the pace of response to these reforms does not yet look sufficient to meet the Government's target of getting 70 percent of lone parents into work by 2010.

Suggested Citation

  • 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.
  • Handle: RePEc:bri:cmpowp:03/072
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    File URL: http://www.bris.ac.uk/Depts/CMPO/workingpapers/wp72.pdf
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    References listed on IDEAS

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    1. 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.
    2. Rebecca M. Blank, 2002. "Evaluating Welfare Reform in the United States," Journal of Economic Literature, American Economic Association, vol. 40(4), pages 1105-1166, December.
    3. Richard Blundell & Hilary W. Hoynes, 2004. "Has 'In-Work' Benefit Reform Helped the Labor Market?," NBER Chapters,in: Seeking a Premier Economy: The Economic Effects of British Economic Reforms, 1980-2000, pages 411-460 National Bureau of Economic Research, Inc.
    4. Duncan, Alan & Giles, Christopher, 1996. "Labour Supply Incentives and Recent Family Credit Reforms," Economic Journal, Royal Economic Society, vol. 106(434), pages 142-155, January.
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    Cited by:

    1. Mike Brewer & Anita Ratcliffe & Sarah dSmith, 2012. "Does welfare reform affect fertility? Evidence from the UK," Journal of Population Economics, Springer;European Society for Population Economics, vol. 25(1), pages 245-266, January.
    2. Bitler, Marianne P. & Gelbach, Jonah B. & Hoynes, Hilary W., 2008. "Distributional impacts of the Self-Sufficiency Project," Journal of Public Economics, Elsevier, vol. 92(3-4), pages 748-765, April.
    3. Dolton, Peter & Smith, Jeffrey A., 2011. "The Impact of the UK New Deal for Lone Parents on Benefit Receipt," IZA Discussion Papers 5491, Institute for the Study of Labor (IZA).
    4. Tarja K. Viitanen, 2005. "Cost of Childcare and Female Employment in the UK," LABOUR, CEIS, vol. 19(s1), pages 149-170, December.
    5. Jenkins, Andrew, 2004. "Women, lifelong learning and employment," LSE Research Online Documents on Economics 19467, London School of Economics and Political Science, LSE Library.
    6. John Hills & Jane Waldfogel, 2004. "A “third way” in welfare reform? Evidence from the United Kingdom," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 23(4), pages 765-788.
    7. Colm Harmon & Claire Finn & Arnaud Chevalier & Tarja Viitanen, 2006. "The economics of early childhood care and education : technical research paper for the National Economic and Social Forum," Open Access publications 10197/671, School of Economics, University College Dublin.
    8. Richard Blundell & Mike Brewer & Marco Francesconi, 2005. "Job changes, hours changes and the path of labour supply adjustment," IFS Working Papers W05/21, Institute for Fiscal Studies.
    9. Michael Shannon, 2009. "Canadian lone mother employment rates, policy change and the US welfare reform literature," Applied Economics, Taylor & Francis Journals, vol. 41(19), pages 2463-2481.
    10. Andrew Leigh & Roger Wilkins, 2009. "Working Credits: A Low-Cost Alternative to Earned Income Tax Credits?," Melbourne Institute Working Paper Series wp2009n07, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne.
    11. Marco Francesconi & Helmut Rainer & Wilbert vanderKlaauw, 2009. "The Effects of In-Work Benefit Reform in Britain on Couples: Theory and Evidence," Economic Journal, Royal Economic Society, vol. 119(535), pages 66-100, February.
    12. Paul Gregg & Jane Waldfogel & Elizabeth Washbrook, 2005. "Expenditure Patterns Post-Welfare Reform in the UK: Are Low-Income Families Starting to Catch Up?," The Centre for Market and Public Organisation 05/119, Department of Economics, University of Bristol, UK.
    13. Frish, Roni & Zussman, Noam, 2008. "The effect of transfer payments on the labor supply of single mothers," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 37(2), pages 627-643, April.
    14. Richard Blundell & Mike Brewer & Marco Francesconi, 2008. "Job Changes and Hours Changes: Understanding the Path of Labor Supply Adjustment," Journal of Labor Economics, University of Chicago Press, vol. 26(3), pages 421-453, July.
    15. Stephen Nickell, 2004. "Poverty And Worklessness In Britain," Economic Journal, Royal Economic Society, vol. 114(494), pages 1-25, March.
    16. Dan Anderberg, 2008. "Tax credits, income support, and partnership decisions," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 15(4), pages 499-526, August.
    17. Andrew Jenkins, 2004. "Women, Lifelong Learning and Employment," CEE Discussion Papers 0039, Centre for the Economics of Education, LSE.
    18. Libertad González Luna, 2005. "Single mothers and incentives to work: The French experience," Economics Working Papers 818, Department of Economics and Business, Universitat Pompeu Fabra.
    19. Fanny Moffette & Dorothée Boccanfuso & Patrick Richard & Luc Savard, 2013. "Estimating the Impact of the Québec’s Work Incentive Program on Labour Supply: An Ex Post Microsimulation Analysis," Cahiers de recherche 13-01, Departement d'Economique de l'École de gestion à l'Université de Sherbrooke.
    20. Leon Bettendorf & Kees Folmer & Egbert Jongen, 2013. "The dog that did not bark: The EITC for single mothers in the Netherlands," CPB Discussion Paper 229, CPB Netherlands Bureau for Economic Policy Analysis.
    21. James Cloyne, 2011. "What are the Effects of Tax Changes in the United Kingdom? New Evidence from a Narrative Evaluation," CESifo Working Paper Series 3433, CESifo Group Munich.
    22. Brewer, Mike & Duncan, Alan & Shephard, Andrew & Suarez, Maria Jose, 2006. "Did working families' tax credit work? The impact of in-work support on labour supply in Great Britain," Labour Economics, Elsevier, vol. 13(6), pages 699-720, December.
    23. Bettendorf, Leon J.H. & Folmer, Kees & Jongen, Egbert L.W., 2014. "The dog that did not bark: The EITC for single mothers in the Netherlands," Journal of Public Economics, Elsevier, vol. 119(C), pages 49-60.
    24. Gregg, Paul & Waldfogel, Jane & Washbrook, Elizabeth, 2006. "Family expenditures post-welfare reform in the UK: Are low-income families starting to catch up?," Labour Economics, Elsevier, vol. 13(6), pages 721-746, December.

    More about this item

    Keywords

    welfare reform; lone parents; employment;

    JEL classification:

    • H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply

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