Preferences and labor supply effects of benefits: the case of income-based Jobseeker’s Allowance
The UK income support system offers a guaranteed income level to single adults available for full time work so long as both earnings and hours worked are below a threshold level. In this paper we examine the effects of this on labour supply. We show that the restriction on hours worked is irrelevant to the household choices and will never bind. We then look for conditions on preferences under which it is possible to order households by preferences or the wage in such a way that all claimants are lower in the order. If there is a common wage and preferences satisfy a single crossing condition property there is such an ordering in which the most work averse are claimants. If preferences are common but the wage rates are heterogeneous then if preferences are quasilinear in leisure there is also an ordering with low wage households being claimants. With both wage rate and preferences heterogeneity these restrictions need to be combined to monotonically order the population.
|Date of creation:||Jun 2010|
|Contact details of provider:|| Postal: Department of Economics and Related Studies, University of York, York, YO10 5DD, United Kingdom|
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- Bruce D. Meyer & Dan T. Rosenbaum, 2001.
"Welfare, the Earned Income Tax Credit, and the Labor Supply of Single Mothers,"
The Quarterly Journal of Economics,
Oxford University Press, vol. 116(3), pages 1063-1114.
- Bruce D. Meyer & Dan T. Rosenbaum, 1998. "Welfare, the Earned Income Tax Credit, and the Labor Supply of Single Mothers," JCPR Working Papers 32, Northwestern University/University of Chicago Joint Center for Poverty Research.
- Bruce D. Meyer & Dan T. Rosenbaum, 1999. "Welfare, the Earned Income Tax Credit, and the Labor Supply of Single Mothers," NBER Working Papers 7363, National Bureau of Economic Research, Inc.
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- Richard Blundell & Hilary W. Hoynes, 2004. "Has 'In-Work' Benefit Reform Helped the Labor Market?," NBER Chapters,in: Seeking a Premier Economy: The Economic Effects of British Economic Reforms, 1980-2000, pages 411-460 National Bureau of Economic Research, Inc.
- Hilary Hoynes & Richard Blundell, 2001. "Has "In-Work" Benefit Reform Helped the Labour Market?," NBER Working Papers 8546, National Bureau of Economic Research, Inc.
- Mike Brewer, 2001. "Comparing in-work benefits and the reward to work for families with children in the US and the UK," Fiscal Studies, Institute for Fiscal Studies, vol. 22(1), pages 41-77, January.
- Burtless, Gary & Hausman, Jerry A, 1978. "The Effect of Taxation on Labor Supply: Evaluating the Gary Negative Income Tax Experiments," Journal of Political Economy, University of Chicago Press, vol. 86(6), pages 1103-1130, December.
- G. Burtless & J. A. Hausman, 1977. "The Effect of Taxation on Labor Supply: Evaluating the Gary Negative Income Tax Experiment," Working papers 211, Massachusetts Institute of Technology (MIT), Department of Economics.
- Emmanuel Saez, 2000. "Optimal Income Transfer Programs: Intensive Versus Extensive Labor Supply Responses," NBER Working Papers 7708, National Bureau of Economic Research, Inc. Full references (including those not matched with items on IDEAS)
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