Evaluating the Working Families Tax Credit (original) (raw)

Abstract We examine the labour market impact of the Working Families Tax Credit-a financial incentive programme to enhance income and encourage work in low income families, recently introduced in the UK. Family labour supply behaviour is modelled as a discrete choice among a finite set of hours alternatives. We allow for fixed costs, program participation and childcare. The relaibility of this structural model is compared with a difference-in-differences estimator based on previous tax credit reforms.