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The Impact of Government Transfers on Labor Supply in Anglo-American Welfare States

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  • Max Feld

Abstract

This paper offers a new perspective on the often theorized relationship of government transfers to labor supply that incorporates both cross-national and subnational variation in comparable Anglo-American (“liberal”) welfare states. Nearly two decades of Luxembourg Income Study (LIS) Database yearly national survey microdata with subnational geographic identifiers are used to develop multilevel models of labor supply responses across a rich array of heterogeneity in government transfers. The core analyses find that higher transfers (relative to local income averages) can predict slightly lower odds of individual labor force participation in some cases but are not robustly statistically significant across specifications using different policy measures, lagged indicators or gender segregated samples. Correspondingly, models of the relationship between transfers and hours worked per week often find slightly more labor supply associated with higher income replacement rates but estimates are highly variable in direction and statistical significance.

Suggested Citation

  • Max Feld, 2026. "The Impact of Government Transfers on Labor Supply in Anglo-American Welfare States," LIS Working papers 928, LIS Cross-National Data Center in Luxembourg.
    • Handle: RePEc:lis:liswps:928
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