Social assistance and labour supply

The longitudinal, 1988–89 LMAS makes it possible to study the interaction between social assistance and labour supply while allowing for substantial time dependence. Tobit equations for hours worked on and off social assistance, which allow for endogenous selection of social assistance status, are estimated by using FIML. Small, but statistically significant, effects for a social assistance benefit variable are obtained, particularly for females. A claw‐back variable is not consistently useful. The wage rate has a consistently negative coefficient in the selection equations and is important in the Tobit equations. In this paper an attempt is made to reconcile results found in earlier literature. JEL Classification: I38, J22 Aide sociale et offre de travail. L'étude longitudinale de l'Enquête de 1988‐89 sur la population active rend possible l'étude de l'interaction entre l'aide sociale et l'offre de travail tout en permettant la prise en compte de l'effet d'inertie hérité du passé. On calibre des équations Tobit pour les heures travaillées séparément pour les personnes qui reçoivent et ne reçoivent pas d'aide sociale et une équation probit qui permet une sélection endogène du statut d'assisté social en utilisant la méthode du maximum de vraisemblance avec pleine information. On obtient des impacts faibles mais statistiquement significatifs des prestations d'aide sociale sur l'offre de travail pour les femmes. Une variable qui tente de capturer les effets de recouvrement fiscal des prestations n'est pas uniformément utile comme source d'explication. Le taux de salaire a un coefficient négatif de manière générale dans les équations de sélection et est important dans les équations Tobit. Le mémoire tente de réconcilier ces résultats avec ceux que contiennent les études antérieures.     

Tax evasion and labour supply

The total effect of a change in the probability of detection, or other parameters, on the level of tax evasion can be divided into three separate effects, only one of which is determinate.     

Estimating labour supply responses and welfare participation: Using a natural experiment to validate a structural labour supply model

We estimate an economic model of labour supply and welfare participation using data on single men from Quebec drawn from the 1986 Canadian Census. Detailed budget sets for each work‐welfare combination—accounting for income taxes, tax credits and welfare benefit rules—are derived using a micro‐simulation model. We show that predicted reactions to a welfare reform that took place in 1989 replicate actual changes in labour supply and welfare participation. We also illustrate the advantage of having estimated a structural model by showing how labour supply and welfare participation change when income taxes and benefit levels change.     

Collective female labour supply: theory and application

This article deals with female labour supply in the collective framework. It studies married couples and starting from the empirical observation that the husband's labour supply is generally fixed at full-time. It shows that, in this case, structural elements of the decision process, such as individual preferences or the rule that determines the intra-household distribution of welfare, can be identified if household demand for at least one commodity, together with the wife's labour supply, is observed. These theoretical considerations are followed by an application using French data.     

The impact of taxes on female labour supply

There is little agreement in economics on the factors influencing labour supply and hence on the impact of taxes. Within the marginal model, real wages and incomes are directing people's labour market behaviour independent of time and space, whereas the human resources approach takes account of the social environment and past behaviour. Even if strong assumptions are made, the neoclassical theory cannot predict the outcome of a wage increase. The labour supply response depends on the relative strengths of the substitution and the income effect. Since nonparticipation in the labour market is explained by a reservation wage being higher than the market wage, this is the only situation in which neoclassical theory would predict a rise in labour force participation with a wage increase. This case occured in a ‘natural experiment’ in Sweden. The Swedish tax system changed in 1971 from joint to separate taxation of spouses resulting in a substantial increase in the net wage of married women. This article investigates the impact of the change in the Swedish tax system on female labour force participation, concluding that it cannot explain the substantial rise in the participation rates of Swedish women. This is a significant result, questioning standard neoclassical theory and supporting the more institutional views of human labour market behaviour. That is that time and space as well as the social environment are important when analyzing labour supply. This will have consequences for international comparisons. Only factors which explain developments within one country might be relevant for explaining international differences, e.g. in labour force participation.     

The effect of universal child benefits on labour supply

Using a difference‐in‐differences estimator, I find the Canadian Universal Child Care Benefit has significant negative income effects on the labour supply of married individuals. The likelihood of lower‐educated mothers to participate in the labour force is reduced 3.2 percentage points when receiving the benefit. Median hours worked per week among lower‐educated mothers is reduced by 1.9 hours. The effects on higher‐educated mothers are substantial, with median hours worked among higher‐educated mothers reduced by nearly one hour per week. For men, the evidence suggests small but significant income effects on labour supply, consistent with the literature on labour supply elasticities.     

The supply of qualified nurses: a classical model of labour supply

The need to ensure adequate numbers of nurses is a key requirement of the current modernization of the UK NHS. However, it is unclear how effective wages are as an instrument to maintain or increase the nursing workforce, both in terms of absolute numbers and in the number of whole time equivalents. This study sets out to estimate a classical model of labour supply for British qualified married or cohabiting nurses and midwives, looking at both the participation decision and the hours of work supplied. Data are from the Quarterly Labour Force Survey over the years 1999–2000. Participation and hours of work are found to be inelastic with respect to own wage. These results suggest that increasing the wage would only have a moderate effect on labour supply. Interestingly, there is no significant statistical difference between having a child of nursery age (3–4) and having a child of school age (5–15) on participation and hours supplied. This suggests that recent policy initiatives to increase female labour force participation, through the provision of free nursery places, has been successful. Preliminary analysis of a split private and public sector sample suggests that hours supplied are completely inelastic with respect to wages in the public sector.     

Preferences and the labour supply of married women

The paper reports the main results of using British cross-section data to estimate a labour supply function in which preference variables are interacted with terms measuring the slope and position of the budget constraint.     

Does labour supply respond to a flat tax?

We exploit the exogenous change in marginal tax rates created by the Russian flat tax reform of 2001 to identify the effect of taxes on the labour supply of men and women. We apply a weighted difference‐in‐difference regression approach and instrumental variables to estimate labour supply functions using a panel dataset. The mean regression results indicate that the tax reform led to a statistically significant increase in hours of work for men but had no effect on work hours for women. However, we find a positive response to tax changes in both tails of the female work hour distribution. We also find that the reform increased the probability of finding a job among both men and women. Despite significant variation in individual responses, the aggregate labour supply elasticities are trivial. This suggests that reform‐induced changes in labour supply are an unlikely explanation for the amplified personal income tax revenues that followed the reform.     

The determinants of female labour supply in Hungary

The aim of this paper is to closely examine the effect on a married woman's labour supply decision of non-labour income and of her own wage rate in a transition economy. The paper first shows that labour force participation rates for Hungarian females, though decreasing, were still extremely high and comparable to male economic activity in western countries. It then estimates labour supply parameters using a model that controls for sample selection issues associated with the labour supply of married women. Wage elasticity is estimated to be high and positive (1.81) while the income effect is consistent with leisure being a normal good. No sample selection bias is found.     

Estimating labour supply disequilibrium with fixed-effects random-coefficients regression

Long-term contracting, adjustment costs, or efficiency wages can make a worker supply fewer (more) hours than desired at the current economic opportunity set. A regression model with cross-correlated random coefficients is used to obtain new theoretically based measures of the direction and relative intensity of labour supply disequilibrium. Among prime-aged male hourly paid workers in the United States during 1978–82, evidence of widespread underemployment is found. Among primeaged male salaried workers, some overemployment appears. Regressions incorporating person-specific fixed effects are consistent with a life-cycle labour supply model for salaried workers and suggest a need for fresh ways to include short-run labour demand forces in micro labour supply models of hourly paid workers.     

In-school labour supply,parental transfers,and wages

In many industrialised countries, teenagers have a significant spending power, and they are important customers for specialised industries. The income of teenagers still in full time education comes from two major sources: parental pocket money and earnings from part-time jobs. Little is known about the way these sources interact, and how they depend on parental, school and family characteristics. In this paper, we analyse labour supply of 16 year old British teenagers together with the cash transfers made to them by their parents. We first develop a theoretical model, where labour supply and transfers are jointly determined. We then estimate labour supply and transfers jointly, using unique data on labour supply of teenagers, the wages they receive, and the transfers from their parents. We show how these two processes depend on each other, and how transfers and labour supply react to changes in wages. We are grateful to the Leverhulme Trust for financial support for this research, which has also benefited from support to the IFS as a Designated Research Centre of the ESRC. We thank Murali Agastya, Richard Blundell, Ian Preston, Frank Windmeijer, and two anonymous referees and the editor Bernd Fitzenberger for useful comments.     

Family model of contributions to non-profit organizations and labour supply

In this article a model is presented in which the family decides the labour supply of both spouses and their time donations to non-profit organizations. For the estimation, Spanish data was used which showed that family size and pre-school children influence decisions made about time distribution of husband and wife. Women with fewer family responsibilities work longer hours and donate more time, whilst the effect on men is the contrary. Also, monetary donations by the family are directly related to time donations by the spouses.     

A note on progressive taxes and the supply of labour

It is widely held popular belief that the more progressive the tax system, the greater the disincentive to work effort. This paper seeks to examine the popular belief, and in particular to find circumstances when it may be false. The main conclusion of the paper is that the conditions under which the popular belief is false are stricter than those suggested by previous authors.     

Optimal income taxation with tax avoidance and endogenous labour supply

I determine the optimal income tax schedule when individuals both choose endogenously their labour supply and have the possibility of avoiding paying taxes. Considering a convex concealment cost function, I propose a formula for the optimal marginal tax rate, that generalizes the formula of the standard Mirrlees model to the case of tax avoidance. I also show that the results obtained by Casamatta (2021) in the fixed income case hold true when labour supply is endogenous: with a low enough marginal cost of avoidance, it is optimal to let some taxpayers, located in the interior of the skill distribution, avoid taxes.     

A new approach to understanding labour supply of disabled people

The main interest of this article is to propose an individual utility maximization model to explain the low participation of disabled people. We account for heterogeneity of preferences and furthermore time of self-caring for disabled individuals is considered as an argument in the utility function. The hours of work decided by disabled individuals are neither homogeneous (they depend on unknown characteristics) nor continuous (discrete choice sets). We use data of 4790 households from the Spanish Survey of Disability, Personal Autonomy and Dependency and find association between time of informal care and labour participation and, consequently, the choice between jobs.     

Family labour supply: some empirical results from agriculture

The family is often taken as the decision-making unit in utility maximizing theories of labour supply. At a simple level, the family is composed of two elements, dependents and workers. This paper seeks to quantify the influence of these two elements on family labour supply in agriculture. Family farms are particularly suited to such analysis since institutional rigidities, like the fixed working week, are absent. Econometric methods are used on data from farms in the north-west of england for the year 1976/7. The cross-sectional study uses single equation methods. The results show that only family composition determines the labour supply of the farm family: they can then be used to quantify the effects of individual groups of dependents and workers on family labour supply.     

Informal parental care and female labour supply in Japan

Using the Japanese Study of Aging and Retirement, Japan’s first globally comparable panel survey of the elderly, we estimate the effect on female employment in Japan due to the provision of informal parental care. We observe that informal parental care has little impact on female employment, after controlling for endogeneity of informal care or individual unobserved time-invariant heterogeneity. This finding is consistent with those observed in Europe and the US, underscoring a limited association between care and work in Japan, which is facing ageing at the fastest pace among advanced economies.