School of Economics and Finance

No. 656: Labour Supply Disincentives of Income Support: An Analysis of Single Mothers with No Qualifications in the UK

Zeenat Soobedar , Queen Mary, University of London

December 1, 2009

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This paper examines the labour supply disincentives of the Income Support system among single mothers with no qualifications in the UK. It uses a regression discontinuity approach that exploits the age-eligibility rule establishing automatic withdrawal of Income Support for single mothers whose youngest child turns 16. At this cut-off age, barely ineligible mothers experience an 8.5% increase in their probability of working and an increase in hours of work of about 3. This is consistent with pronounced labour supply disincentives of the income support policy.

J.E.L classification codes: C21, I38, J12

Keywords:Single mothers, Income Support, Labour supply, Regression discontinuity