Labour supply with in-work and in-kind transfers

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    Final published version, 140 KB, PDF document

  • Paul Bingley, Denmark
  • Ian Walker, Denmark
  • Centre for Labour Market and Social Research
There have been a number of changes to the nature of in-work transfers over the last 20 years. Further expansions have been proposed and in-work transfer schemes have recently been promoted as a device for encouraging labour force participation and reducing the severity of the disincentives associated with out-of-work income support schemes. In-kind transfers have also been promoted as a way of proving poverty relief without inducing servere adverse incentive effects. Here we estimate a discrete choice labour supply model which allows for endogenous participation in multiple cash and In-Kind transfer programmes, and for involuntary unemployment. This is applied to the Family Credit, Housing Benefit, Free School Lunch and Milk Token programmes for a sample of 4527 lone mothers drawn from UK Family Expenditure Surveys. We find that Family Credit and In-Kind transfers have larger labour supply incentive effects as they expand up the hours distribution; there are economies to multiple programme participation; and Family Credit and in-kind programme participation are non-separable from labour supply. Also there is quite strong evidence of a utility loss associated with programme participation per se, which is consistent with there being some stigma driving low participation rates.
Original languageEnglish
Publication statusPublished - 1997

    Research areas

  • Arbejdsløshedsbekæmpelse, Storbritannien, HHÅ forskning

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