Template-type: ReDIF-Paper 1.0
Author-Name: Fisher, Paul
Title: British tax credit simplification, the intra-household distribution of income and family consumption
Abstract: The UK Government enacted simplification of its tax credit system in 2003. An interesting consequence of the reform is that tax credit payments were split between partners in couples, causing a rare wallet to purse transfer. This paper presents evidence on the effects of the reform on family spending, using quasi-likelihood techniques, for a sample of low income couples with children. In areas of child goods, evidence of important spending increases are found, whereas spending decreases are observed amongst goods that disproportionately benefit parents. A further key finding is an apparent trade-off between spending on public goods that are not exclusively consumed by children, but may nonetheless have a child development dimension. Results are contrasted to earlier findings from UK 1970’s child benefit reforms. The effects are consistent with a non-cooperative bargaining framework, in which partners differ in their relative preference for different household public goods.

Creation-Date: 20140313
Number: 2014-13
Publication-Status: published
File-URL: https://www.iser.essex.ac.uk/wp-content/uploads/files/working-papers/iser/2014-13.pdf
File-Format: Application/pdf
Handle: RePEc:ese:iserwp:2014-13