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Understanding the mechanisms of in-work benefits: Can they improve employment retention among lone parents?

This research project has been completed. Please contact a team member for further information.

Background

In the last couple of decades, welfare-to-work policies for lone parents have gained considerable momentum in much of the Western world, partly due to the rise of in-work benefits. In the UK alone, this period has seen numerous reforms to the system of in-work benefits, alongside expanded access to affordable childcare and flexible working arrangements.

However, financial incentives aimed at getting people into work are likely to be of limited value if they do not result in those individuals continuing in employment. Traditionally policies in the UK have focussed on getting people into work, and there has been much less attention paid to supporting people once employment has been found.

This research seeks to further explore whether time-limited in-work benefits can encourage job retention particularly amongst lone parents.

Project aims

The researchers investigate the impact of the two recent time-limited in-work benefits that were payable to lone parents: In-Work Credit (IWC) and the financial incentives that were part of the Employment Retention and Advancement (ERA) demonstration.

They go on to assess which in-work benefits – and which specific features of them – are most likely to foster job retention among lone parents.

The project aims to:

  • explore whether IWC and ERA reduce the length of lone parents’ unemployment spells and increase the length of their employment spells
  • analyse how much of the effect on employment generated by these policies reflects higher entry to employment and how much reflects higher retention in employment
  • explore which type of in-work benefit has the greater effect on employment retention, and why

Data from the Department for Work and Pensions’ Work and Pensions Longitudinal Study (WPLS) is used to provide information on benefit receipt, tax credit payments, employment spells and annual earnings.

The researchers analyse the length of employment spells and how they are affected by the receipt of in-work benefits. Making use of innovative methods, the team analyses the transitions people make between different employment states, and how these transitions are affected by different in-work benefits.

Project website

http://www.nuffieldfoundation.org/can-work-benefits-improve-employment-among-lone-parents

Team members

Professor Richard Blundell

Research Director - Institute of Fiscal Studies

Professor Richard W Blundell, CBE, FBA is a British Economist and Econometrician. He is currently the David Ricardo Professor of Political Economy at University College London.


Professor Mike Brewer

Professor of Economics, Director of MiSoC - ISER - University of Essex

Mike Brewer is Director of the ESRC Centre on Micro-Social Change. His main research interests are in how welfare benefits, labour market programmes and the tax system affects decisions made by households.


Jonathan Cribb

Research Economist - Institute for Fiscal Studies

Jonathan´s main interests are in studying labour supply and the labour market. He has worked on the effect of raising the state pension age for women, the performance of living standards since the recession and the employment decisions of lone parents. More recent work focuses on understanding the labour market, pay and pensions in the public sector.


Professor John Ham

Professor of Economics - University of Maryland

John Ham is currently a Research Associate at IZA and at the Institute for Research on Poverty at the University of Wisconsin. His research interests include labour economics, public economics, health economics, and experimental economics. He is also studying movements of disadvantaged single mothers in and out of employment.


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Photo credit: Johanna