I have studied the UK’s system of tax credits and welfare benefits for families with children since 2000.
In “Does Welfare Reform Affect Fertility? Evidence from the UK“, with Sarah Smith and Anita Ratcliffe, we showed that this major expansion of benefits for low-income working and workless families did lead to more births (although we couldn’t tell whether the response was a true rise in fertility or a change in the timing of births). This work was used by by Adam Perkins, in his book The Welfare Trait. My response makes clear that I don’t agree with the way that he used our results (and this led to my favourite Twitter comment, here).
In “Did Working Families’ Tax Credit work? The Impact of In-Work Support on Labour Supply in Great Britain“, with Alan Duncan, Andrew Shephard and Maria Jose Suarez, we showed that the Working Families’ Tax Credit (WFTC) – at the time, the UK version of the EITC – did lead to more lone parents working, but that increases to out-of-work welfare benefits worked in the other direction. We also showed that more generous in-work credits slightly reduced employment amongst mothers in couples. And in “Job Changes and Hours Changes: Understanding the Path of Labor Supply Adjustment“, with Richard Blundell and Marco Francesconi, we showed that lone parents who wanted to work more in response to more generous in-work credits were far more likely to change jobs (as a way to increase their hours) as were other employees.
More recent work has looked at specific welfare-to-work programmes aimed at lone parents in the UK. In “Can’t Work or Won’t Work: Quasi-Experimental Evidence on Work Search Requirements for Single Parents”, with Silvia Avram and Andrea Salvatori, we show the impact of “activating” single parents: that is, making them actively look for work as a condition of receiving benefits. We find that, consistent with the predictions of a simple search model, the work search requirements have heterogeneous impacts, leading some single parents to move into work, but leading some (especially those with weak previous labour market attachments) to move onto disability benefits (with no search conditionalities) or into non-claimant unemployment.
In “Lone Parents, Time-Limited In-Work Credits and the Dynamics of Work and Welfare”, with Jonathan Cribb, we study two time-limited in-work credits. Such programmes are cheaper, and more targeted, than conventional in-work credits, but are thought to have small to zero long-term impacts. We study two time-limited in-work credits introduced in the mid-2000s in the UK and find they reduced welfare participation and increased employment. Both policies increased job retention once recipients were in work and boosted employment even after the payments were stopped. Conditioning on hours of work was important. Paying a credit to those working 16+ hours a week only increased part-time work, while conditioning on full-time work reduced part-time work and increased full-time work.