The impact of a time-limited, targeted in-work benefit in the medium-term:…

an evaluation of in work credit

IFS (Institute for Fiscal Studies) Working Paper W11/14 by Mike Brewer (Institute for Social and Economic Research, University of Essex and IFS), James Browne and Haroon Chowdry (IFS) and Claire Crawford (Institute of Education, University of London and IFS)

Abstract

Conventional in-work benefits or tax credits are now well established as a policy instrument for increasing labour supply and tackling poverty. A different sort of in-work credit is one where the payments are time-limited, conditional on previous receipt of welfare, and, perhaps, not means-tested. Such a design is cheaper, and perhaps better targeted, but potentially less effective. Using administrative data, this paper evaluates one such policy for lone parents in the UK which was piloted in around one third of the country. It finds that the policy did increase flows off welfare and into work, and that these positive effects did not diminish after recipients reached the 12 month time-limit for receiving the supplement. Most of the impact arose by speeding up welfare off-flows: the job retention of programme recipients was good, but this cannot be attributed to the programme itself.

This paper is based on research commissioned by the UK Department for Work and Pensions (DWP).

Full text (PDF 39pp)

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