Male Employment by age – US, FR and UK 2007
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
16 18 20 22 24 26 28 30 32 34 36 38 40 42 44 46 48 50 52 54 56 58 60 62 64 66 68 70 72 74
FRUKUS
Bozio, Blundell and Laroque
Data: UK LFS.
0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
0.9
1
16 18 20 22 24 26 28 30 32 34 36 38 40 42 44 46 48 50 52 54 56 58 60 62 64 66 68 70 72 74
1975
1985
1995
2005
Male Employment by age UK: 1975 - 2005
Bozio, Blundell and Laroque
Male Hours by age – US, FR and UK 2005
0
200
400
600
800
1000
1200
1400
1600
1800
2000
2200
16 18 20 22 24 26 28 30 32 34 36 38 40 42 44 46 48 50 52 54 56 58 60 62 64 66 68 70 72 74
FRUKUS
Bozio, Blundell and Laroque
Female Employment by age in the UK – 1975 - 2005
Source: LFS.
0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
0.9
16 18 20 22 24 26 28 30 32 34 36 38 40 42 44 46 48 50 52 54 56 58 60 62 64 66 68 70 72 74
1975 1985 1995 2005
Bozio, Blundell and Laroque
Female Hours by age – US, FR and UK 2005
0
200
400
600
800
1000
1200
1400
16 18 20 22 24 26 28 30 32 34 36 38 40 42 44 46 48 50 52 54 56 58 60 62 64 66 68 70 72 74
FRUKUS
Bozio, Blundell and Laroque
Top incomes and taxable income elasticities
A. Top 1% Income Share and MTR, 1962-2003
0%
10%
20%
30%
40%
50%
60%
70%
80%
1962
1966
1970
1974
1978
1982
1986
1990
1994
1998
2002
Marg
inal Tax R
ate
4%
6%
8%
10%
12%
14%
16%
Inco
me S
hare
Top 1% MTR
Top 1% income share
Source: MR, UK SPI (tax return data)
0
100
200
300
400
500
600
700
20 23 26 29 32 35 38 41 44 47 50 53 56 59 62 65 68 71 74 77
Age of Head
Weekly
In
co
me (
Per
Ho
useh
old
)
0
0.5
1
1.5
2
2.5
3
3.5
Eq
uiv
ale
nt
Ad
ult
s P
er
Ho
useh
old
Net Income PerHousehold (LH Axis)
Equivalent AdultsPerHousehold (RH Axis)
Net Income, Number of Equivalent Adults per Household
Source: UK FES 1974-2006
0
100
200
300
400
500
600
700
20 23 26 29 32 35 38 41 44 47 50 53 56 59 62 65 68 71 74 77
Age of Head
Eq
uiv
ilis
ed
No
n-D
ura
ble
Exp
en
dit
ure
(Per
Eq
uiv
ale
nt
Ad
ult
)
0
0.5
1
1.5
2
2.5
3
3.5
Nu
mb
er
of
Eq
uiv
ale
nt
Ad
ult
s P
er
Ho
useh
old
Equivilised Non-DurableExpenditure (LH Axis)
Equivalent AdultsPerHousehold (RH Axis)
Consumption and Needs
Source: UK FES 1974-2006
£0.00
£50.00
£100.00
£150.00
£200.00
£250.00
£300.00
hours of work
WFTC
Income Support
Net earnings
Other income
The interaction of WFTC with other benefits in the UK
£0.00
£50.00
£100.00
£150.00
£200.00
£250.00
£300.00
hours of work
Local tax rebate
Rent rebate
WFTC
Income Support
Net earnings
Other income
Strong implications for EMTRs, PTRs and labour supply
The interaction of WFTC with other benefits in the UK
What about the size of labour supply responses?Structural Model Elasticities – lower educated lone parents
Earnings Density Extensive Intensive
0 0.3966
80 0.1240 0.5029 0.5029
140 0.1453 0.7709 0.3944
220 0.1723 0.7137 0.2344
300 0.1618 0.4920 0.0829
Participation elasticity 1.1295
(a) Youngest Child Aged 11-18
Note: Similar strong extensive margin responses for men in ‘pre-retirement’ period using structural retirement models and for married women with children.
Blundell and Shephard (2009)
© Institute for Fiscal Studies
Importance of take-up and information/hassle costs
Variation in take-up probability with entitlement to FC/WFTC0
.2.4
.6.8
1P
rob
ab
ilit
y o
f ta
ke
-up
0 50 100 150 200FC/WFTC entitlement (£/week, 2002 prices)
Lone parents Couples
Earnings Density Extensive Intensive
0 0.5942
80 0.1694 0.2615 0.2615
140 0.0984 0.6534 0.1570
220 0.0767 0.5865 0.1078
300 0.0613 0.4984 0.0834
Participation elasticity 0.6352
(c) Youngest Child Aged 0-4
Differences in these intensive and extensive margins by age and demographics have strong implications for the design of the tax schedule...
What about the size of labour supply responses?Structural Model Elasticities – lower educated lone parents
