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

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

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

Breaking the "Fertilizer Poverty" and Food Insecurity Traps in Smallholder Maize Based Farming System in Southern Africa: Experiences and Lessons from Soil Fertility Network/Economics and Policy Working Group (EPWG)

Smallholder farmers in southern Africa face acute food insecurity because the productive capacity of their soils has declined. These resource-poor farmers increasingly cannot afford mineral fertilizers Farmers mentioned the lack of fertilizers for their depleted soils as the most important constraint- "Empty Soils, stomachs and pockets." In response to this challenge, Soil Fert Net researchers in southern Africa have developed and promoted a range of "best-bet" soil fertility management technological (SFMT) options for farmers. This paper presents a review of financial, adoption, institutional and policy analysis undertaken by EPWG members on the use of SFMT by smallholders. Financial and risk analysis tools, selected econometric models and policy analysis matrix were employed to measure profitability, incidence and intensity of adoption and to understand the effects of policy instruments necessary to promote SFMTs. Financial analysis of "best bets" indicates that (even with current unfavorable input and output prices) there are positive payoffs to investing in SFMTs. Adoption studies in Malawi, Zimbabwe, Zambia and Mozambique revealed that farmers need to make a significant initial investment in terms of labor, land and capital before they start to obtain benefits. SFMTs are also management and information intensive and farmers' limited skills and knowledge are critical factors influencing adoption. Profitability and subsequent adoption decisions are sensitive to changes in maize grain price, crop yield and the cost of borrowing capital. The study recommend institutional and policy support and advocacy for better access to credit, input availability, market linkages to scale up the diffusion and promotion of SFMTs.Policy briefs, Policy analysis matrix, markets, cropping systems, legumes, N fertilizer, Crop Production/Industries, Food Security and Poverty,

Gravity gradient boom stabilization system for the Applications Technology Satellite /ATS-E/, volume 1 Final report

Gravity gradient boom stabilization system for ATS