Female Labour Supply, Human Capital and Welfare Reform

59 Pages Posted: 11 May 2013

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)

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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.

Keywords: labour supply, human capital, welfare reform

JEL Classification: J22, J24, H31

Suggested Citation

Blundell, Richard W. and Costa Dias, Monica and Meghir, Costas and Shaw, Jonathan, Female Labour Supply, Human Capital and Welfare Reform. IZA Discussion Paper No. 7375, Available at SSRN: https://ssrn.com/abstract=2263651 or http://dx.doi.org/10.2139/ssrn.2263651

Richard W. Blundell (Contact Author)

UCL ( email )

Department of Economics
Gower Street
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+44 20 7504 5863 (Phone)
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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
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Costas Meghir

Yale University ( email )

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New Haven, CT CT 06511
United States
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Yale University - Cowles Foundation ( email )

Box 208281
New Haven, CT 06520-8281
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Institute for Fiscal Studies (IFS) ( email )

7 Ridgmount Street
London, WC1E 7AE
United Kingdom

National Bureau of Economic Research (NBER) ( email )

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Centre for Economic Policy Research (CEPR)

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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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