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Estimating participation responses using transfer program reform

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  • Bastani, Spencer

    (Linnéuniversitetet)

  • Moberg, Ylva

    (Uppsala universitet)

  • Selin, Håkan

    (IFAU - Institute for Evaluation of Labour Market and Education Policy)

Abstract

In this paper we estimate labor force participation responses for married women in Sweden using population-wide register data and detailed information about individuals’ budget sets. For identification we exploit a reform in the system for housing allowances in 1997 which affected participation tax rates for households with/without children differently. Using a simple theoretical framework we provide a structural interpretation of our estimates and highlight how the employment response depends on the employment level. Our central estimate of the participation elasticity is 0.13. When splitting the treated sample into four quartiles based on the wife’s skill level we find that the participation elasticity is more than twice as large for the lowest-skill sample than for the highest-skill sample.

Suggested Citation

  • Bastani, Spencer & Moberg, Ylva & Selin, Håkan, 2016. "Estimating participation responses using transfer program reform," Working Paper Series 2016:1, IFAU - Institute for Evaluation of Labour Market and Education Policy.
    • Handle: RePEc:hhs:ifauwp:2016_001
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    References listed on IDEAS

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    1. Palviainen Heikki, 2018. "Evaluation of the Finnish Income Disregard Reform," Working Papers 1819, Tampere University, Faculty of Management and Business, Economics.
    2. Palviainen Heikki, 2021. "Incentivizing last-resort social assistance clients: Evidence from a Finnish policy experiment," Working Papers 2132, Tampere University, Faculty of Management and Business, Economics.

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    More about this item

    Keywords

    labor supply; social assistance; housing allowance; in-work tax credits; take up of transfer programs;
    All these keywords.

    JEL classification:

    • H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply

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