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Expenditure Patterns Post-Welfare Reform in the UK: Are low-income families starting to catch up?

Author

Listed:
  • Paul Gregg
  • Jane Waldfogel
  • Elizabeth Washbrook

Abstract

In this paper we provide evidence on how the UK government's welfare reforms since 1998 have affected the material well-being of children in low-income families. We examine changes in expenditure patterns and ownership of durable goods for low- and higher-income families between the pre-reform period (1995-1998) and the post-reform period (2000-2003), using data from the Family Expenditure Survey. The methodological approach is a difference-in-difference-in-difference analysis that exploits the fact that age variation in the reforms favoured low-income families over higher-income ones and families with children age under 11 over those with older children. We find that low-income families with children are catching up to more affluent families, in their expenditures and their possession of durable goods. Moreover, expenditures on child-related items are increasing faster than expenditures on other items.

Suggested Citation

  • Paul Gregg & Jane Waldfogel & Elizabeth Washbrook, 2005. "Expenditure Patterns Post-Welfare Reform in the UK: Are low-income families starting to catch up?," CASE Papers 099, Centre for Analysis of Social Exclusion, LSE.
  • Handle: RePEc:cep:sticas:099
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    File URL: http://sticerd.lse.ac.uk/dps/case/cp/CASEpaper99.pdf
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    References listed on IDEAS

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    1. Laura Blow & Ian Walker & Yu Zhu, 2012. "Who Benefits From Child Benefit?," Economic Inquiry, Western Economic Association International, vol. 50(1), pages 153-170, January.
    2. Case, Anne & Deaton, Angus, 1998. "Large Cash Transfers to the Elderly in South Africa," Economic Journal, Royal Economic Society, vol. 108(450), pages 1330-1361, September.
    3. 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.
    4. Hills, John, 2004. "Inequality and the State," OUP Catalogue, Oxford University Press, number 9780199276646.
    5. Shelly J. Lundberg & Robert A. Pollak & Terence J. Wales, 1997. "Do Husbands and Wives Pool Their Resources? Evidence from the United Kingdom Child Benefit," Journal of Human Resources, University of Wisconsin Press, vol. 32(3), pages 463-480.
    6. Mike Brewer & Tom Clark & Matthew Wakefield, 2002. "Social security in the UK under New Labour: what did the Third Way mean for welfare reform?," Fiscal Studies, Institute for Fiscal Studies, vol. 23(4), pages 505-537, December.
    7. 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.
    8. Richard Dickens & David T Ellwood, 2003. "Child Poverty in Britain and the United States," Economic Journal, Royal Economic Society, vol. 113(488), pages 219-239, June.
    9. 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.
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    More about this item

    Keywords

    child poverty; family expenditures; welfare reform; difference-in-difference;

    JEL classification:

    • I3 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty
    • J18 - Labor and Demographic Economics - - Demographic Economics - - - Public Policy

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