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Lone Parents, Time-Limited In-Work Credits and the Dynamics of Work and Welfare

Listed author(s):
  • Brewer, Mike

    ()

    (ISER, University of Essex)

  • Cribb, Jonathan

    ()

    (Institute for Fiscal Studies, London)

Time-limited in-work credits are cheaper, and more targeted, than conventional in-work credits, but are thought to have small to zero long-term impacts. We study two time-limited in-work credits introduced in the mid-2000s in the UK and find they reduced welfare participation and increased employment. Both policies increased job retention once recipients were in work and boosted employment even after the payments were stopped. Conditioning on hours of work was important. Paying a credit to those working 16+ hours a week only increased part-time work, while conditioning on full-time work reduced part-time work and increased full-time work.

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File URL: http://ftp.iza.org/dp10414.pdf
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Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 10414.

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Length: 51 pages
Date of creation: Dec 2016
Handle: RePEc:iza:izadps:dp10414
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  1. Richard Blundell & Monica Costa Dias & Costas Meghir & Jonathan Shaw, 2016. "Female Labor Supply, Human Capital, and Welfare Reform," Econometrica, Econometric Society, vol. 84, pages 1705-1753, September.
  2. 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.
  3. 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.
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