Evaluating the labour market impact of Working Families' Tax Credit using difference-in-differences (original) (raw)
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Evaluating the Working Families Tax Credit
2002
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.
The labour market impact of the working families' tax credit
2000
Abstract In October 1999, the working families' tax credit (WFTC) replaced family credit as the main package of in-work support for families with children. Among a range of stated aims, the WFTC is intended to '��� improve work incentives, encouraging people without work to move into employment'. In this paper, we consider the impact of WFTC on hours and participation.
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This Briefing Note provides the first published estimates of the labour market impact of the new tax credits, and the tax and benefit reforms that preceded them, on families with children. Specifically, this note examines all personal tax and benefit reforms introduced between April 2000 and April 2003. We use a structural model of labour supply to examine how these changes affect both the participation rate (the proportion of parents who would like to work at a given hourly wage) and the average weekly hours of work.
Population Research and Policy Review, 2009
Using survey data from Earned Income Tax Credit (EITC) recipients in Madison County, New York, we evaluate the effectiveness of the EITC in improving the economic well-being of low-income households. In particular, we examine the impact of the EITC across household types. For tax years 2002 through 2004, we find that the EITC is responsible for significantly lowering the poverty rate of EITC recipients, from 57 to 49 percent. In fact, for households below the poverty line, the EITC fills 31 percent of the gap between their adjusted gross income and the poverty line. The EITC has the largest impact on single parent households, lowering their poverty rate by 11.2 percentage points and reducing their poverty gap by almost 35 percent. However, the EITC has negligible effects on the poorest households in the sample-childless singles. A majority (64 percent) of EITC recipients intends to use at least some of the refund on basic needs and almost half plan on using part of their refund for debt repayment. This suggests that the EITC helps the majority of recipients get by but does not increase their economic mobility. Somewhat surprisingly, single parent households in the sample are not that different from married parent households in terms of EITC amounts, poverty rates, use of credit, and participation in government programs, despite earning less.
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The aim of this paper is to measure the potential effect of a family policy introduced in Spain in 2003 that provides working mothers with a monthly cash benefit of 100 euros per child aged under 3 years. We explore the effect of the policy on eligible women's labour market participation. In the tradition of the policy evaluation literature we use a difference-indifferences in differences (DDD) estimation approach. Our results support a small but significant positive effect of the policy. We find that since the implementation of the policy the labour market participation rate for mothers of children aged under 3 has risen by 3 percentage points compared to the rate for non-policy-eligible females. This represents 5% of their average labour market participation in 2002, the year before the policy was implemented. This overall policy effect is dominated by the effect of the policy among high school educated females.