Abstract
Abstract Abstract We estimate a model of labour supply and participation in multiple cash and in-kind welfare programmes. The modeling exploits a reform that affected U.K. single mothers. In-work cash entitlements increased under this reform but eligibility to in-kind child nutrition programmes was lost for some households. When we allow for differences in the costs associated with each welfare programme we find that in-work cash and in-work in-kind transfers both have large positive labour supply effects. There is, however, a utility loss from programme participation which is estimated to be larger for the cash programme than for the child nutrition programmes. Our findings imply that the partial cash out of the in-kind transfers reduced labour supply and suggest that there may be a place in policy portfolios for in-kind programmes despite their “inefficiency”. JEL Codes C31, C35, D12, J22
Highlights
This paper is concerned with the effects of cash and in-kind transfers on labour supply where there are costs associated with the receipt of such transfers
We model the effect on labour supply of several transfer programmes relevant to single mothers in the U.K.: Family Credit is an in-work cash transfer; Income Support is out-of-work cash; Housing Benefit for those with high housing costs and low income; Welfare Milk Tokens for low income families with pre-school age children; and Free School Lunches for children of school age in low income families
There was a reduction in hours of work, conditional on participation: something we would expect if the income effect of the larger cash entitlements dominates the substitution effect associated with lowering the phase-out rate of Family Credit from 70% to 50%, and/or if there was significant costs associated with child nutrition programmes – but such a fall in hours is consistent with having younger children, for example
Summary
This paper is concerned with the effects of cash and in-kind transfers on labour supply where there are costs associated with the receipt of such transfers. There was a reduction in hours of work, conditional on participation: something we would expect if the income effect of the larger cash entitlements dominates the substitution effect associated with lowering the phase-out rate of Family Credit from 70% to 50%, and/or if there was significant costs associated with child nutrition programmes – but such a fall in hours is consistent with having younger children, for example.
Sign-in/Register to view highlights & summary Sign-in/Register to access full text options 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a call
