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The impact of a time-limited, targeted in-work benefit in the medium-term: an evaluation of In Work Credit

Author

Listed:
  • Mike Brewer

    (Institute for Fiscal Studies and Resolution Foundation)

  • James Browne

    (Institute for Fiscal Studies and Institute for Fiscal Studies)

  • Haroon Chowdry

    (Institute for Fiscal Studies)

  • Claire Crawford

    (Institute for Fiscal Studies and University of Birmingham)

Abstract

Conventional in-work benefits or tax credits are now well established as a policy instrument for increasing labour supply and tackling poverty. A different sort of in-work credit is one where the payments are time-limited, conditional on previous receipt of welfare, and, perhaps, not means-tested. Such a design is cheaper, and perhaps better targeted, but potentially less effective. Using administrative data, this paper evaluates one such policy for lone parents in the UK which was piloted in around one third of the country. It finds that the policy did increase flows off welfare and into work, and that these positive effects did not diminish after recipients reached the 12 month time-limit for receiving the supplement. Most of the impact arose by speeding up welfare off-flows: the job retention of programme recipients was good, but this cannot be attributed to the programme itself.

Suggested Citation

  • Mike Brewer & James Browne & Haroon Chowdry & Claire Crawford, 2011. "The impact of a time-limited, targeted in-work benefit in the medium-term: an evaluation of In Work Credit," IFS Working Papers W11/14, Institute for Fiscal Studies.
    • Handle: RePEc:ifs:ifsewp:11/14
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    References listed on IDEAS

    as
    1. David Card & Dean R. Hyslop, 2006. "The Dynamic Effects of an Earnings Subsidy for Long-Term Welfare Recipients: Evidence from the SSP Applicant Experiment," NBER Working Papers 12774, National Bureau of Economic Research, Inc.
    2. Heckman, James J & Smith, Jeffrey A, 1999. "The Pre-programme Earnings Dip and the Determinants of Participation in a Social Programme. Implications for Simple Programme Evaluation Strategies," Economic Journal, Royal Economic Society, vol. 109(457), pages 313-348, July.
    3. James J. Heckman & Hidehiko Ichimura & Petra E. Todd, 1997. "Matching As An Econometric Evaluation Estimator: Evidence from Evaluating a Job Training Programme," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 64(4), pages 605-654.
    4. David Card & Dean R. Hyslop, 2005. "Estimating the Effects of a Time-Limited Earnings Subsidy for Welfare-Leavers," Econometrica, Econometric Society, vol. 73(6), pages 1723-1770, November.
    5. Ham, John C & LaLonde, Robert J, 1996. "The Effect of Sample Selection and Initial Conditions in Duration Models: Evidence from Experimental Data on Training," Econometrica, Econometric Society, vol. 64(1), pages 175-205, January.
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    More about this item

    Keywords

    In-work benefits; labour supply; time-limits; welfare; lone parents.;
    All these keywords.

    JEL classification:

    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs

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