Female Labor Supply, Human Capital and Welfare Reform

Abstract

We estimate a dynamic model of employment, human capital accumulationincluding education, and savings for women in the United Kingdom, exploiting tax and benefit reforms, and use it to analyze the effects of welfare policy. We find substantial elasticities for labor supply and particularly for lone mothers. Returns to experience, which are important in determining the longer-term effects of policy, increase with education, but experience mainly accumulates when in full-time employment. Tax credits are welfare improving in the U.K. and increase lone-mother labor supply, but the employment effects do not extend beyond the period of eligibility. Marginal increases in tax credits improve welfare more than equally costly increases in income support or tax cuts.

Money vs. Time: Family Income, Maternal Labor Supply, and Child Development

“…The provision of work incentives is typical of many welfare programs, and as shown in Blundell et al (2016) in the U.K., mothers, and especially single mothers, are usually the most responsive target to these incentives.…”

“…2 Hotz and Scholz (2003) and Nichols and Rothstein (2016) summarize theoretical and empirical findings especially single mothers, are usually the main target group of these welfare programs and are most responsive to incentives (Meyer, 2002;Blundell and Hoynes, 2004;Blundell et al, 2016).…”

“…At the same time, the longitudinal structure allows about the effect of the EITC on maternal labor supply. Blundell et al (2016) analyze the case of the U.K. and find substantial elasticities for women's labor supply (in particular for the group of single mothers).…”

Rising Wage Inequality in Germany: Increasing Heterogeneity and Changing Selection into Full-Time Work

“…Incidentally, the part-time experience of full-time females above the median of the distribution appears to fluctuate more strongly with the business cycle compared to females below the median, whose part-time experience follows more of a secular upward trend. Note that labor supply of females is known to be more elastic than that of men and that the part-time experience of females is often related to career interruptions after child birth (Blundell et al 2016). After maternity leave, females often re-enter the labor market in part time, but may return to full-time work later on (Fitzenberger et al 2016, Paul 2016.…”

“…Negative long term career effects of transition from full-time to part-time work for women after childbirth have been studied by Connolly and Gregory (2009) and Paul (2016). Recent evidence suggests that the accumulation of human capital is very low in part-time work compared to full-time work (Blundell et al 2016). Furthermore, conditioning on the employment history will go some way towards controlling for characteristics which are unobservable in cross-sectional data, and which Card et al (2013) attribute to worker fixed effects.…”