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The effects of in-work benefit reform in Britain on couples: Theory and evidence

  • Francesconi, Marco
  • Rainer, Helmut
  • Klaauw,

This article develops a simple model of household decisions that explicitly accounts for the role played by the Working Families’Tax Credit (WFTC) to examine its effects on couples in Britain. The main implications of the model are tested using panel data from the British Household Panel Survey collected between 1991 and 2002. Overall, the financial incentives of the reform had small and statistically insignificant effects on a wide range of married mothers’decisions. Women’s responses, however, were highly heterogeneous, depending on their partners’labour supply and earnings.

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Paper provided by University of Munich, Department of Economics in its series Munich Reprints in Economics with number 20334.

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Date of creation: 2009
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Publication status: Published in Economic Journal 535 119(2009): pp. F66-F100
Handle: RePEc:lmu:muenar:20334
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  6. Flinn, C.J., 1998. "Modes of Interaction Between Divorced Parents," Working Papers 98-04, C.V. Starr Center for Applied Economics, New York University.
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  18. Marianne Bitler & Jonah Gelbach & Hilary Hoynes & Madeline Zavodny, 2004. "The impact of welfare reform on marriage and divorce," Demography, Springer, vol. 41(2), pages 213-236, May.
  19. Eissa, Nada & Hoynes, Hilary Williamson, 2004. "Taxes and the labor market participation of married couples: the earned income tax credit," Journal of Public Economics, Elsevier, vol. 88(9-10), pages 1931-1958, August.
  20. Iyigun, Murat & Walsh, Randall P., 2007. "Endogenous gender power, household labor supply and the demographic transition," Journal of Development Economics, Elsevier, vol. 82(1), pages 138-155, January.
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  25. Mike Brewer & Marco Francesconi & Paul Gregg & Jeffrey Grogger, 2009. "Feature: In-work Benefit Reform in a Cross-National Perspective - Introduction," Economic Journal, Royal Economic Society, vol. 119(535), pages F1-F14, 02.
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