Estimating Participation Responses Using Transfer Program Reform

50 Pages Posted: 24 Mar 2016

See all articles by Spencer Bastani

Spencer Bastani

IFAU - Institute for Labour Market Policy Evaluation; Linnaeus University - Department of Economics and Statistics; Research Institute of Industrial Economics (IFN)

Ylva Moberg

Uppsala University

Håkan Selin

Uppsala Center for Fiscal Studies

Date Written: February 29, 2016

Abstract

In this paper we estimate labor force participation responses for married women in Sweden using population-wide register data and detailed information about individuals’ budget sets. For identification we exploit a reform in the system for housing allowances in 1997 which affected participation tax rates for households with/without children differently. Using a simple theoretical framework we provide a structural interpretation of our estimates and highlight how the employment response depends on the employment level. Our central estimate of the participation elasticity is 0.13. When splitting the treated sample into four quartiles based on the wife’s skill level we find that the participation elasticity is more than twice as large for the lowest-skill sample than for the highest-skill sample.

Keywords: labor supply, social assistance, housing allowance, in-work tax credits, take up of transfer programs

JEL Classification: H200, J220

Suggested Citation

Bastani, Spencer and Moberg, Ylva and Selin, Håkan, Estimating Participation Responses Using Transfer Program Reform (February 29, 2016). CESifo Working Paper Series No. 5781, Available at SSRN: https://ssrn.com/abstract=2753495

Spencer Bastani (Contact Author)

IFAU - Institute for Labour Market Policy Evaluation ( email )

Box 513
751 20 Uppsala
Sweden

Linnaeus University - Department of Economics and Statistics ( email )

Växjö, 351 06
Sweden

Research Institute of Industrial Economics (IFN) ( email )

Box 55665
Grevgatan 34, 2nd floor
Stockholm, SE-102 15
Sweden

Ylva Moberg

Uppsala University ( email )

Box 513
Uppsala, 751 20
Sweden

Håkan Selin

Uppsala Center for Fiscal Studies ( email )

Box 513
Uppsala, 751 20
Sweden

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