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Female labour supply, human capital and welfare reform

Author

Listed:
  • Richard Blundell

    (Institute for Fiscal Studies and University College London)

  • Monica Costa Dias

    (Institute for Fiscal Studies and Institute for Fiscal Studies)

  • Costas Meghir

    (Institute for Fiscal Studies and Yale University)

  • Jonathan Shaw

    (Institute for Fiscal Studies and Financial Conduct Authority)

Abstract

We estimate a dynamic model of employment, human capital accumulation - including education, and savings for women in the UK, exploiting tax and benefit reforms, and use it to analyze the effects of welfare policy. We find substantial elasticities for labor supply and particularly for lone mothers. Returns to experience, which are important in determining the longer-term effects of policy, increase with education, but experience mainly accumulates when in full-time employment. Tax credits are welfare improving in the UK and increase lone-mother labor supply, but the employment effects do not extend beyond the period of eligibility. Marginal increases in tax credits improve welfare more than equally costly increases in income support or tax cuts.

Suggested Citation

  • Richard Blundell & Monica Costa Dias & Costas Meghir & Jonathan Shaw, 2016. "Female labour supply, human capital and welfare reform," IFS Working Papers W16/03, Institute for Fiscal Studies.
    • Handle: RePEc:ifs:ifsewp:16/03
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    References listed on IDEAS

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    JEL classification:

    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household

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