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Female Labour Supply, Human Capital and Welfare Reform

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  • Richard Blundell
  • Monica Costa Dias
  • Costas Meghir
  • Jonathan Shaw

Abstract

We consider the impact of tax credits and income support programs on female education choice, employment,hours and human capital accumulation over the life-cycle. We analyze both the short run incentive effects and the longer run implications of such programs. By allowing for risk aversion and savings,we quantify the insurance value of alternative programs. We find important incentive effects on education choice and labor supply, with single mothers having the most elastic labor supply. Returns to labor market experience are found to be substantial but only for full-time employment, and especially for women with more than basic formal education. For those with lower education the welfare programs are shown to have substantial insurance value. Based on the model, marginal increases to tax credits are preferred to equally costly increases in income support and to tax cuts, except by those in the highest education group.

Suggested Citation

  • Richard Blundell & Monica Costa Dias & Costas Meghir & Jonathan Shaw, 2013. "Female Labour Supply, Human Capital and Welfare Reform," STICERD - Public Economics Programme Discussion Papers 21, Suntory and Toyota International Centres for Economics and Related Disciplines, LSE.
    • Handle: RePEc:cep:stippp:21
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    More about this item

    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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