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

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Listed:
  • Francesconi, Marco
  • Rainer, Helmut
  • Klaauw,

Abstract

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.

Suggested Citation

  • Francesconi, Marco & Rainer, Helmut & Klaauw,, 2009. "The effects of in-work benefit reform in Britain on couples: Theory and evidence," Munich Reprints in Economics 20334, University of Munich, Department of Economics.
  • Handle: RePEc:lmu:muenar:20334
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    References listed on IDEAS

    as
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    Citations

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    Cited by:

    1. DAVID M. BLAU & WILBERT van der KLAAUW, 2013. "What Determines Family Structure?," Economic Inquiry, Western Economic Association International, vol. 51(1), pages 579-604, January.
    2. Blundell, Richard & Francesconi, Marco & van der Klaauw, Wilbert, 2011. "Anatomy of Welfare Reform Evaluation: Announcement and Implementation Effects," IZA Discussion Papers 6050, Institute for the Study of Labor (IZA).
    3. Jeffrey Grogger & LynnA. Karoly, 2009. "The Effects of Work-Conditioned Transfers on Marriage and Child Well-Being: A Review," Economic Journal, Royal Economic Society, vol. 119(535), pages 15-37, February.
    4. 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.
    5. Fisher, Hayley & Zhu, Anna, 2016. "The Effect of Changing Financial Incentives on Repartnering," IZA Discussion Papers 10243, Institute for the Study of Labor (IZA).
    6. Bastani, Spencer & Moberg, Ylva & Selin, Håkan, 2016. "Estimating participation responses using transfer program reform," Working Paper Series, Center for Labor Studies 2016:4, Uppsala University, Department of Economics.
    7. Bergolo, Marcelo & Galván, Estefanía, 2018. "Intra-household Behavioral Responses to Cash Transfer Programs. Evidence from a Regression Discontinuity Design," World Development, Elsevier, vol. 103(C), pages 100-118.
    8. Bastani, Spencer & Moberg, Ylva & Selin, Håkan, 2016. "The Anatomy of the Extensive Margin Labor Supply Response," Working Paper Series 2016:11, Uppsala University, Department of Economics.
    9. Helmut Rainer & Stefan Bauernschuster & Natalia Danzer & Anita Fichtl & Timo Hener & Christian Holzner & Janina Reinkowski, 2013. "Kindergeld und Kinderfreibeträge in Deutschland: Evaluierung der Auswirkungen auf familienpolitische Ziele," ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 66(09), pages 28-36, April.
    10. Giuseppe De Luca & Claudio Rossetti & Daniela Vuri, 2012. "In-Work Benefits for Married Couples: An Ex-Ante Evaluation of EITC and WTC Policies in Italy," CEIS Research Paper 244, Tor Vergata University, CEIS, revised 23 Jul 2012.
    11. Francesconi, Marco & Rainer, Helmut & van der Klaauw, Wilbert, 2008. "Unintended Consequences of Welfare Reform: The Case of Divorced Parents," IZA Discussion Papers 3891, Institute for the Study of Labor (IZA).
    12. Ugo Colombino, 2015. "Five Crossroads on the Way to Basic Income. An Italian Tour," Italian Economic Journal: A Continuation of Rivista Italiana degli Economisti and Giornale degli Economisti, Springer;Società Italiana degli Economisti (Italian Economic Association), vol. 1(3), pages 353-389, November.
    13. Marco Francesconi & Helmut Rainer & Wilbert Klaauw, 2015. "Unintended consequences of welfare reform for children with single parents: a theoretical analysis," Review of Economics of the Household, Springer, vol. 13(3), pages 709-733, September.
    14. Richard Blundell & Monica Costa Dias & Costas Meghir & Jonathan Shaw, 2011. "The long-term effects of in-work benefits in a life-cycle model for policy evaluation," CeMMAP working papers CWP07/11, Centre for Microdata Methods and Practice, Institute for Fiscal Studies.
    15. Jonathan Shaw, 2014. "The redistribution and insurance value of welfare reform," IFS Working Papers W14/21, Institute for Fiscal Studies.
    16. Ghazala Azmat, 2014. "Evaluating the effectiveness of in-work tax credits," Empirical Economics, Springer, vol. 46(2), pages 397-425, March.

    More about this item

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household
    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs
    • J12 - Labor and Demographic Economics - - Demographic Economics - - - Marriage; Marital Dissolution; Family Structure
    • J13 - Labor and Demographic Economics - - Demographic Economics - - - Fertility; Family Planning; Child Care; Children; Youth
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply

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