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The impact of a time-limited, targeted in-work benefit in the medium-term: an evaluation of In Work Credit

Author

Listed:
  • Mike Brewer

    () (Institute for Fiscal Studies and University of Essex)

  • James Browne

    () (Institute for Fiscal Studies and Institute for Fiscal Studies)

  • Haroon Chowdry

    (Institute for Fiscal Studies)

  • Claire Crawford

    () (Institute for Fiscal Studies)

Abstract

Conventional in-work benefits or tax credits are now well established as a policy instrument for increasing labour supply and tackling poverty. A different sort of in-work credit is one where the payments are time-limited, conditional on previous receipt of welfare, and, perhaps, not means-tested. Such a design is cheaper, and perhaps better targeted, but potentially less effective. Using administrative data, this paper evaluates one such policy for lone parents in the UK which was piloted in around one third of the country. It finds that the policy did increase flows off welfare and into work, and that these positive effects did not diminish after recipients reached the 12 month time-limit for receiving the supplement. Most of the impact arose by speeding up welfare off-flows: the job retention of programme recipients was good, but this cannot be attributed to the programme itself.

Suggested Citation

  • Mike Brewer & James Browne & Haroon Chowdry & Claire Crawford, 2011. "The impact of a time-limited, targeted in-work benefit in the medium-term: an evaluation of In Work Credit," IFS Working Papers W11/14, Institute for Fiscal Studies.
  • Handle: RePEc:ifs:ifsewp:11/14
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    File URL: http://www.ifs.org.uk/wps/wp1114.pdf
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    References listed on IDEAS

    as
    1. James J. Heckman & Hidehiko Ichimura & Petra E. Todd, 1997. "Matching As An Econometric Evaluation Estimator: Evidence from Evaluating a Job Training Programme," Review of Economic Studies, Oxford University Press, vol. 64(4), pages 605-654.
    2. David Card & Dean R. Hyslop, 2005. "Estimating the Effects of a Time-Limited Earnings Subsidy for Welfare-Leavers," Econometrica, Econometric Society, vol. 73(6), pages 1723-1770, November.
    3. Ham, John C & LaLonde, Robert J, 1996. "The Effect of Sample Selection and Initial Conditions in Duration Models: Evidence from Experimental Data on Training," Econometrica, Econometric Society, vol. 64(1), pages 175-205, January.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    In-work benefits; labour supply; time-limits; welfare; lone parents.;

    JEL classification:

    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs

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