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Evaluating In-Work Benefit Reform: The Working Families Tax Credit in the U.K

Author

Listed:
  • Richard Blundell
  • Alan Duncan
  • Julian McCrae
  • Costas Meghir

Abstract

In this paper we examine the labour market impact of the proposed new earned income tax credit - Working Families Tax Credit - in the U.K. Family labour supply behaviour is modelled as a discrete choice among a finite set of hours alternatives. Our estimation strategy allows for a random preference heterogeneity, fixed costs, program participation and childcare expenditures. In simulation we find moderately sized positive behavioural responses to the introduction of the new tax credit.

Suggested Citation

  • Richard Blundell & Alan Duncan & Julian McCrae & Costas Meghir, 2000. "Evaluating In-Work Benefit Reform: The Working Families Tax Credit in the U.K," JCPR Working Papers 160, Northwestern University/University of Chicago Joint Center for Poverty Research.
    • Handle: RePEc:wop:jopovw:160
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    References listed on IDEAS

    as
    1. Bingley, Paul & Walker, Ian, 1997. "The Labour Supply, Unemployment and Participation of Lone Mothers in In-Work Transfer Programmes," Economic Journal, Royal Economic Society, vol. 107(444), pages 1375-1390, September.
    2. Richard Blundell & Alan Duncan & Costas Meghir, 1998. "Estimating Labor Supply Responses Using Tax Reforms," Econometrica, Econometric Society, vol. 66(4), pages 827-862, July.
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