COWLES FOUNDATION FOR RESEARCH IN
ECONOMICS Box 208281
COWLES FOUNDATION DISCUSSION PAPER NO. 1892 Female Labour Supply, Human Capital and Welfare Reform Richard Blundell, Monica Costa Dias, Costas Meghir, and Jonathan Shaw April 2013 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 thus analyze both the short run incentive effects and the longer run
implications of such programs. By allowing for risk aversion and savings we are also able
to 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 labour 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. |
