THE MEANS TESTING OF BENEFITS AND THE LABOUR SUPPLY OF THE WIVES OF UNEMPLOYED MEN: RESULTS FROM A MOVER-STAYER MODEL

Abstract

Women married to unemployed men in Britain have lower participation rates than those married to employed men. Possible reasons include (1) husbands and wives fac-ing similar unfavourable local labour market conditions, (2) their both having characteristics which make it more likely that they will be unemployed, and (3) the means testing of benefit income, which creates a disincentive for the wife to work. These is-sues are investigated using a British survey of unemployed men and their families. Econometric results from a Mover-Stayer model indicate a limited effect of means testing on the labour supply of the wives.Labour Supply, Disincentives, Benefit System.