Female Labor Supply, Human Capital and Welfare Reform

81 Pages Posted: 15 Apr 2015

See all articles by Richard W. Blundell

Richard W. Blundell

UCL; Centre for Economic Policy Research (CEPR)

Monica Costa Dias

School of Economics, University of Bristol; Institute for Fiscal Studies (IFS)

Costas Meghir

Yale University; Yale University - Cowles Foundation; Institute for Fiscal Studies (IFS); National Bureau of Economic Research (NBER); Centre for Economic Policy Research (CEPR); IZA Institute of Labor Economics

Jonathan Shaw

Institute for Fiscal Studies (IFS)

Date Written: April 13, 2015

Abstract

We estimate a dynamic model of employment, human capital accumulation — including education, and savings for women in the UK, exploiting policy changes. We analyze both the incentive effects and the welfare implications of tax credits and income support programs and we account for their insurance value. We find important incentive effects on education choice and labor supply, with single mothers having the most elastic labor supply. Returns to experience increase with education, but experience only accumulates when in full-time employment. Finally, marginal increases in tax credits are preferred to equally costly income support or to tax cuts.

Keywords: Female labor supply, Welfare reform, Tax credits, Education choice, Dynamic discrete choice models, Life cycle models

JEL Classification: H2, H3, J22, J24

Suggested Citation

Blundell, Richard W. and Costa Dias, Monica and Meghir, Costas and Shaw, Jonathan, Female Labor Supply, Human Capital and Welfare Reform (April 13, 2015). Cowles Foundation Discussion Paper No. 1892R, Available at SSRN: https://ssrn.com/abstract=2593877 or http://dx.doi.org/10.2139/ssrn.2593877

Richard W. Blundell

UCL ( email )

Department of Economics
Gower Street
London, WC1E 6BT
United Kingdom
+44 20 7504 5863 (Phone)
+44 20 7916 2773 (Fax)

HOME PAGE: http://www.ucl.ac.uk/~uctp39a/

Centre for Economic Policy Research (CEPR)

London
United Kingdom

Monica Costa Dias

School of Economics, University of Bristol ( email )

Bristol
United Kingdom

Institute for Fiscal Studies (IFS) ( email )

7 Ridgmount Street
London, WC1E 7AE
United Kingdom

Costas Meghir (Contact Author)

Yale University ( email )

37 Hillhouse avenue
New Haven, CT CT 06511
United States
+12034323558 (Phone)

Yale University - Cowles Foundation ( email )

Box 208281
New Haven, CT 06520-8281
United States

Institute for Fiscal Studies (IFS) ( email )

7 Ridgmount Street
London, WC1E 7AE
United Kingdom

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Centre for Economic Policy Research (CEPR)

London
United Kingdom

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Jonathan Shaw

Institute for Fiscal Studies (IFS) ( email )

7 Ridgmount Street
London, WC1E 7AE
United Kingdom

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