Employment, hours of work and the optimal design of earned income tax credits

This paper examines the optimal schedule of marginal tax rates and the design of earned income tax credits. The analysis is based on a structural labour supply model which incorporates unobserved heterogeneity, fixed costs of work and the detailed non-convexities of the tax and transfer system. An analytical framework is developed that allows explicitly for an extensive margin in work choices and also the partial observability of hours of work. This is contrasted to the standard case in which only earnings (and non-labour income) are observable to the government. The empirical motivation is the earned income tax credit reforms in Britain which include a minimum hours requirement at 16 hours per week and a further bonus at 30 hours. Our analysis examines the case for the use of hours-contingent payments and lends support for the overall structure of the British tax credit reforms. However, we also provide a strong case for a further reduction of marginal rates for lower earners but only those with school age children

Employment, hours of work and the optimal taxation of low income families

This paper examines the tax schedule for low income families with children. We take an optimal tax approach based on a structural labour supply model which incorporates unobserved heterogeneity, fixed costs of work, childcare costs and the detailed non-convexities of the tax and transfer system. The motivation is the British earned income tax credit reform (WFTC) and its interaction with the tax and transfer system for lone parents. Our analysis also examines the case for the use of hours-contingent payments. The results point to a tax schedule which depends on the age of children, with tax credits only optimal for low earners with school age children. The results also suggest a welfare improving role for hours-contingent payments although this is mitigated when hours cannot be monitored or recorded accurately by the tax authorities

Why is consumption more log normal than income? Gibrat’s Law revisited

Significant departures from log normality are observed in income data, in violation of Gibrat’s law. We identify a new empirical regularity, which is that the distribution of consumption expenditures across households is, within cohorts, closer to log normal than the distribution of income. We explain these empirical results by showing that the logic of Gibrat’s law applies not to total income, but to permanent income and to maginal utility. These findings have important implications for welfare and inequality measurement, aggregation, and econometric model analysis

The impact of tax and benefit changes between April 2000 and April 2003 on parents' labour supply

This Briefing Note provides the first published estimates of the labour market impact of the new tax credits, and the tax and benefit reforms that preceded them, on families with children. Specifically, this note examines all personal tax and benefit reforms introduced between April 2000 and April 2003. We use a structural model of labour supply to examine how these changes affect both the participation rate (the proportion of parents who would like to work at a given hourly wage) and the average weekly hours of work. We examine how the impact varies between lone mothers and adults in couples with children, and how it varies with both the number of children and the age of the youngest child in the family

Are we teaching our students what they need to know about ageing? Results from the National Survey of Undergraduate Teaching in Ageing and Geriatric Medicine

Introduction - Learning about ageing and the appropriate management of older patients is important for all doctors. This survey set out to evaluate what medical undergraduates in the UK are taught about ageing and geriatric medicine and how this teaching is delivered. Methods – An electronic questionnaire was developed and sent to the 28/31 UK medical schools which agreed to participate. Results – Full responses were received from 17 schools. 8/21 learning objectives were recorded as taught, and none were examined, across every school surveyed. Elder abuse and terminology and classification of health were taught in only 8/17 and 2/17 schools respectively. Pressure ulcers were taught about in 14/17 schools but taught formally in only 7 of these and examined in only 9. With regard to bio- and socio- gerontology, only 9/17 schools reported teaching in social ageing, 7/17 in cellular ageing and 9/17 in the physiology of ageing. Discussion – Even allowing for the suboptimal response rate, this study presents significant cause for concern with UK undergraduate education related to ageing. The failure to teach comprehensively on elder abuse and pressure sores, in particular, may be significantly to the detriment of older patients

Evaluating the labour market impact of Working Families' Tax Credit using difference-in-differences

A difference-in-differences methodology cannot identify the labour market impact of WFTC alone because other taxes and benefits changed at the same time as its introduction. However, a comparison of the change in employment rates for parents against adults without children should underestimate any positive labour supply impact of WFTC for lone parents. Using two different household surveys, we find WFTC and associated reforms increased lone parents' employment by around 3.6 percentage points (ppt). For couples with children, we find that WFTC and associated reforms had no significant effect on mothers' employment, and was associated with a -0.5ppt change in fathers' employment, with the reforms encouraging households to have one earner rather than two. Overall, these changes correspond to between 25,000 and 59,000 extra workers depending upon the data source used. Robustness analysis of our identifying assumptions is generally favourable to our conclusions for lone parents

Collective labour supply with children

We extend the collective model of household behavior to allow for the existence of public consumption. We show how this model allows to analyze welfare consequences of policies aimed at changing the distribution of power within the household. In particular, we claim that our setting provides an adequate conceptual framework for addressing issues linked to the ’targetting’ of specific benefits or taxes. We also show that the observation of the labor supplies and the household demand for the public good allow to identify individual welfare and the decision process. This requires either a separability assumption, or the presence of a distribution factor

Quantum Topological Excitations: from the Sawtooth Lattice to the Heisenberg Chain

The recently elucidated structure of the delafossite YCuO$_{2.5}$ reveals a Cu-O network with nearly independent $\Delta$ chains having different interactions between the $s=1/2$ spins. Motivated by this result, we study the $\Delta$ chain for various ratios $J_{\rm bb}/J_{\rm bv}$ of the base-base and base-vertex interactions. By exact diagonalization and extrapolation, we show that the elementary excitation spectrum, which (within numerical error) is the same for total spins $S_{\rm tot}=0$ and 1, has a gap only in the interval $0.4874(1) \leq J_{\rm bb}/J_{\rm bv} \leq 1.53(1)$. The gap is dispersionless for $J_{\rm bb}/J_{\rm bv}=1$, but has increasing $k$-dependence as $J_{\rm bb}/J_{\rm bv}$ moves away from unity, related to the instability of dimers in the ground state.Comment: 4 pages, 6 figures (revtex twocolumn