Abstract
Improving incentives for the low-paid is an important objective for the low-paid themselves and for the economy as a whole. Providing a constructive means for people to enhance their well-being by their own efforts is an appropriate social goal. The route may be working longer hours, or seeking out a better-paid job, or acquiring more marketable skills. Improving incentives is a matter of making the extra effort or investment entailed appear worthwhile. This also applies to people not currently receiving a wage, who might be discouraged from labour market participation because they do not regard the expected benefit from working as sufficient (this expected benefit depends not only on gross wage rates attached to particular jobs and on the tax-benefit system but also on the probability of acquiring particular jobs). Thus we should not restrict ourselves to consideration of the currently low-paid, but should also bear in mind the circumstances of groups with a marginal attachment to the labour market, including the unemployed. The economy as a whole can benefit through the extra output produced when the quality and quantity of labour input is increased. This is particularly important when demographic trends point to a fall in the number of young people entering the labour market in the next few years (NEDO, 1988).
This chapter expresses the opinions and judgements of its authors. It does not represent any official view of the National Economic Development Office.
Access this chapter
Tax calculation will be finalised at checkout
Purchases are for personal use only
Preview
Unable to display preview. Download preview PDF.
References
Arrufat, J. and Zabalza, A. (1986) ‘Female labour supply with taxation, random preferences, and optimization errors’, Econometrica, 54: 47–64.
Ashworth, J. S. and Ulph, D. T. (1981a) ‘Endogeneity I — Estimating labour supply with piecewise linear budget constraints’, in Brown, C. V. (ed.), Taxation and Labour Supply (London: Allen & Unwin).
Ashworth, J. S. and Ulph, D.T. (1981b) ‘Household models’ in Brown, C. V. (ed.), Taxation and Labour Supply (London: Allen & Unwin).
Atkinson, A. B. (1983) The Economics of Inequality (Oxford: Clarendon Press) 2nd edn.
Atkinson, A. B. and Fleming, J. S. (1978) ‘Unemployment, social security and incentives’, Midland Bank Review (Autumn 1978): 6–16.
Atkinson, A.B., Gomulka, J., Micklewright, J. and Rau, N. (1984) ‘Unemployment benefit, duration and incentives in Britain: how robust is the evidence?’, Journal of Public Economics, 23 (1/2): 3–26.
Atkinson, A. B. and Micklewright, J. (1985) Unemployment Benefits and Unemployment Duration ST/ICERD occasional paper, 6.
Atkinson, A. B. and Micklewright, J. (1989) ‘Turning the screw: benefits for the unemployed 1979–88’, in Dilnot, A. and Walker, I. (eds), The Economics of Social Security (Oxford: Oxford University Press).
Atkinson, A. B. and Stern, N. H. (1980) ‘On the switch from direct to indirect taxation’, Journal of Public Economics, 14(2): 195–224.
Atkinson, A. B. and Sutherland, H. (1988) ‘Introduction’, in Atkinson, A. B. and Sutherland, H. (eds), Tax-Benefit Models, ST/ICERD occasional paper, 10.
Atkinson, A. B. and Sutherland, H. (1989) Taxation, the Poverty Trap and the 1989 Budget, Taxation Review Background Paper, 4 (April 1989) (London: Fabian Society).
Bazen, S. (1985) Low Wages, Family Circumstances, and Minimum Wage Legislation, Family Income Support, part 10, no. 643 (May) (London: Policy Studies Institute).
Bazen, S. (1988) Minimum Wage Legislation: the Likely Impact on Earnings, Poverty, and Employment in the UK, Phd. thesis, London School of Economics and Political Science (May 1988).
Becker, G. S. (1965) ‘A theory of the allocation of time’, Economic Journal, 75: 493–517.
Beenstock, M. et al. (1987) Work, Welfare and Taxation (London: Allen & Unwin).
Beveridge, Lord (1942) Social Insurance and Allied Services (London: HMSO).
Blank, R. (1985) ‘The impact of state earnings differentials on household welfare and labour force behaviour’, Journal of Public Economics, 28:25–58.
Blundell, R., Meghir, C., Symons, E. and Walker, I. (1984) ‘On the reform of taxation of husband and wife: are incentives important?’, Fiscal Studies, 5 (4): 1–22.
Blundell, R., Meghir, C., Symons, E. and Walker, I. (1986) ‘A labour supply model for the simulation of tax and benefit reforms’, in Blundell, R. and Walker, I. (eds), Unemployment, Search and Labour Supply (Cambridge: Cambridge University Press).
Blundell, R., Meghir, C., Symons, E. and Walker, I. (1988) ‘Labour supply specification and the evaluation of tax reforms’, Journal of Public Economics, 36: 23–52.
Blundell, R. and Walker, I. (1982) ‘Modelling the joint determination of household labour supplies and commodity demands’, Economic Journal, 92: 351–64.
Blundell, R. and Walker, I. (1983) Limited dependent variables in demand analysis: an application to modelling family labour supply and commodity demand behaviour, Discussion Paper, ES126 (Department of Econometrics and Social Statistics, University of Manchester).
Blundell, R. and Walker, I. (1986) ‘A lifecycle consistent model of family labour supply using cross-section data’, Review of Economic Studies, 53: 539–58.
Blundell, R. and Walker, I. (1988) ‘Taxing family income’, Economic Policy, (April).
Bradshaw, J. and Huby, M. (1989) ‘Trends in dependence on supplementary benefits’, in Dilnot, A. and Walker, I. (eds), The Economics of Social Security (Oxford: Oxford University Press) Chapter 3.
Brosnan, P. and Wilkinson, F. (1987) Cheap Labour: Britain’s False Economy (London: Low Pay Unit) (September).
Brown, C. V., Levin, E. and Ulph, D. T. (1976) ‘Estimates of labour hours supplied by married male workers in Britain’, Scottish Journal of Political Economy 23 (3): 261–77.
Brown, C. V. et al. (192-3) Direct Taxation and Short run Labour Supply, H M Treasury Project, Working Papers nos 1–12 (Department of Economics, University of Stirling.
Brown, C. V. et al. (1986) ‘Payment systems, demand constraints and their implications for research into labour supply’, in Blundell, R. and Walker, I. (eds), Unemployment, Search and Labour Supply (Cambridge: Cambridge University Press).
Brown, C. V. et al. (1987) Taxation and Family Labour Supply, Final Report of H M Treasury project (Department of Economics, University of Stirling).
Browning, M., Deaton, A., and Irish, M. (1985) ‘A profitable approach to labour supply and commodity demands over the life cycle’, Econometrica, 53 (3): 503–44.
Casey, B. (1988) Temporary Employment: Practice and Policy in Britain (London: Policy Studies Institute).
Clifton, R. and Tatton-Brown, C. (1979) The Impact of Employment Protection Laws on Small Firms, Department of Employment Research Paper, 6 (London: HMSO).
Confederation of British Industry (CBI) (1984) Attitudes towards Unemployment (London: CBI Social Affairs Directorate) (November).
Craig, C., Rubery, J., Tarling, R. and Wilkinson, F. (1982) Labour Market Structures, Industrial Organisation and Low Pay (Cambridge: Cambridge University Press).
Daniel, W. W. (1980) Maternity Rights. The Experience of Women (London: Policy Studies Institute).
Daniel, W. and Stilgoe, E. (1978) The Impact of the Employment Protection Laws, XLIV 577 (London: Policy Studies Institute).
Department of Employment (1986) Building Business — Not Barriers, Cmnd.9794 (London: HMSO).
Department of Employment (1988) Wages Councils, Consultation Document. (London: HMSO).
Department of Health and Social Security (DHSS) (1985) Reform of Social Security (Green Paper) 1 Cmnd9517 (London: HMSO).
Dex, S. (1987) Women’s Labour Supply and the Demand for Childcare Provisions in the WES, Report to Equal Opportunities Commission (London).
Dex, S. (1988) Women’s Attitudes Towards Work (London: Macmillan).
Dickens, W. T. and Katz, L. F. (1987) ‘Inter-industry wage differences and industry characteristics’, in Lang, K. and Leonard, J. S. (eds), Unemployment and the Structure of Labour Markets (New York: Basil Blackwell).
Dilnot, A., Kay, J., and Morris, C. (1984) The Reform of Social Security (Oxford: Oxford University Press).
Dilnot, A. and Kell, M. (1989) ‘Male unemployment and women’s work’, Chapter 8 in Dilnot, A. and Walker, I. (eds), The Economics of Social Security (Oxford: Oxford University Press).
Dilnot, A. and Morris, C. (1983) ‘Private costs and benefits: measuring replacement rates’, in Greenhalgh, C., Layard, R. and Oswald, A. (eds), The Causes of Unemployment (Oxford: Clarendon Press).
Dilnot, A. and Stark, G. (1986) ‘The poverty trap, tax cuts and fowler’, Fiscal Studies, 7 (1): 1–10.
Dilnot, A., Stark, G. and Webb, S. (1988) ‘The IFS tax and benefit model’, in Atkinson, A. B. and Sutherland, H. (eds), Tax-Benefit Models, ST/ICERD occasional paper, 10.
Dilnot, A. and Webb, S. (1988) ‘Reforming NICs’, Fiscal Studies, 9 (4): 1–24.
Dilnot, A. and Webb, S. (1989a) ‘The 1988 Social Security Reforms’, in Dilnot, A. and Walker, I. (eds), The Economics of Social Security (Oxford: Oxford University Press).
Dilnot, A. and Webb, S. (1989b) ‘Reforming National Insurance Contributions: a progress report’, Fiscal Studies, 10 (2): 38–47.
Doeringer, P. B. and Piore, M. J. (1971) Internal Labor Markets and Manpower Analysis (Lexington: D. C. Heath).
Egginton, D. (1987) ‘A historical analysis of labour supply incentives’, in Beenstock, M. et al., Work, Welfare and Taxation (London: Allen & Unwin).
Evans, S., Goodman, J. and Hargreaves, L. (1985) Unfair Dismissal Law and Employment Practice in the 1980s, Department of Employment research paper, 53 (London: HMSO) (July).
Greenhalgh, C. (1980) ‘Participation and hours of work for married women in Great Britain’, Oxford Economic Papers, 32: 296–318.
Greenhalgh, C., and Mayhew, K. (1981) ‘Labour supply in Great Britain: theory and evidence’, in Hornstein, Z., Grice, J. and Webb, A. (eds), The Economics of the Labour Market (London: HMSO).
Halpern, J. and Hausman, J. A. (1986) ‘Choice under uncertainty: labour supply and the decision to apply for disability insurance’, in Blundell, R. and Walker, I. (eds), Unemployment, Search and Labour Supply (Cambridge: Cambridge University Press): 294–302.
Hart, P. E. and Trinder, C. (1986) ‘Employment protection, national insurance, income tax and youth unemployment’, in Hart. P. E. (ed.), Unemployment and Labour Market Policies (Aldershot: Gower): 29–51.
Hausman, J. A. (1980) ‘The effect of wages, taxes, and fixed costs on women’s labor force participation’, Journal of Public Economics 14: 161–94.
Hausman, J. A. (1985) ‘The econometrics of nonlinear budget sets’, Econometrica, 53(6): 1255–82.
Heckman, J., Killingsworth, M., and MaCurdy, T. (1981) ‘Empirical evidence on static supply models: a survey of recent developments’, in Hornstein, Z., Grice, J. and Webb, A. (eds), The Economics of the Labour Market (London: HMSO).
Industrial Relations Service (IRS) (1988) ‘Wages Councils after the Wages Act’, European Industrial Relations Review, 171 (April): 21–2.
Jenkins, S. and Millar, J. (1989) ‘Income risk and income maintenance: implications for incentives to work’, in Dilnot, A. and Walker, I. (eds), The Economics of Social Security (Oxford: Oxford University Press).
Joshi, H. (1986) ‘Participation in paid work: evidence from the Women and Employment Survey’, in Blundell, R. and Walker, I. (eds), Unemployment, Search and Labour Supply (Cambridge: Cambridge University Press).
Katz, L. F. and Summers, L. H. (1989) ‘Industry rents: evidence and implications’, Brookings Papers on Economic Activity.
Kay, J. and King, M. (1986) The British Tax System (Oxford: Oxford University Press) 4th edn.
Killingsworth, M. R. and Heckman, J. J. (1986) ‘Female labor supply: a survey’, in Ashenfelter, O. and Layard, R. (eds), Handbook of Labour Economics (Amsterdam: North-Holland).
Krueger, A. B. and Summers, L. H. (1988) ‘Efficiency wages and the interindustry wage structure’, Econometrica, 56 (March): 259–93.
Labour Research Department (LRD) (1986) Part-time Workers (London: LRD).
Labour Research Department (LRD) (1987) Temporary Workers (London: LRD).
Layard R. (1978) Hours Supplied by British Married Men with Endogenous Overtime, discussion paper, 30 (Centre for Labour Economics, London School of Economics).
Layard, P. R. (1986) How to beat Unemployment (Oxford: Oxford University Press).
Layard, P. R., Barton, M. and Zabalza, A. (1980) ‘Married women’s participation and hours’, Economica, 47: 51–72.
Layard, P. R. andNickell, S. (1986) ‘Unemployment in Britain’, Economica, 53: S121–70.
Martin, J. and Roberts, C. (1984) Women and Employment: A Lifetime Perspective (London: Department of Employment and Office of Population Censuses and Surveys).
Micklewright, J. (1986) ‘Unemployment and incentives to work: policy and evidence in the 1980s’, in Hart, P.E. (ed)., Unemployment and Labour Market Policies (Aldershot: Gower).
Minford, P. (1983) ‘Labour market equilibrium in an open economy’, in Greenhalgh, C., Layard, R. and Oswald, A. (eds), The Causes of Unemployment, (Oxford: Clarendon Press).
Minford, P. (1985) Unemployment: Cause and Cure (Oxford: Basil Blackwell) 2nd edn.
Minford, P. and Ashton, P. (1989) ‘The Poverty Trap and the Laffer Curve — What can the GHS tell us?’, CEPR discussion paper (London).
Mottershed, P. (1989) Recent Developments in Childcare: A Review, Equal Opportunities Commission (London: HMSO).
National Economic Development Office (NEDO) (1988) Young People and the Labour Market — A Challenge for the 1990s (London: NEDO).
Nickell, S. and Andrews, M. (1983) ‘Trade unions, real wages and employment in Britain 1951–79’, in Greenhalgh, C., Layard, R. and Oswald, A. (eds), The Causes of Unemployment (Oxford: Clarendon Press).
Parker, H. (1989) Instead of the Dole: An Enquiry into Integration of the Tax and Benefit Systems After 1990 (London: Routledge).
Pencavel, J. (1986) ‘Labor supply of men: A survey’, in Ashenfelter, O. and Layard, R. (eds), Handbook of Labour Economics (Amsterdam: North-Holland).
Rowntree, B. (1901) Poverty — a Study of Town Life (London: Macmillan).
Ruffell, R. J. (1981) ‘Endogeneity II: direct estimation of labour supply functions with piece-wise linear budget constraints’, in Brown, C. V. (ed.) Taxation and Labour Supply (London: Allen & Unwin).
Schoer, K. (1987) ‘Part- time employment: Britain and West Germany’, Cambridge Journal of Economics, 11: 83–94.
Simpson, R. (1986) ‘The cost of childcare services’, in Cohen, B. and Clarke, K. (eds), Childcare and Equal Opportunities: Some Policy Perspectives (London: Equal Opportunities Commission).
Slichter, S. H. (1950) ‘Notes on the structure of wages’, Review of Economics and Statistics, 32 (February).
Sprague, A. (1988) ‘Post War fertility and female labour force participation rates’, Economic Journal, 98: 682–700.
Thaler, R. H. (1989) ‘Interindustry wage differentials’, Journal of Economic Perspectives, 3 (2) (Spring).
Thurow, L. C. (1975) Generating Inequality (New York: Basic Books).
Wadsworth, J. (1989) Unemployment Benefits and Search Effort in the UK Labour Market, discussion paper, 333 (January) (Centre for Labour Economics, London School of Economics).
Zabalza, A. (1983) ‘The CES utility function, nonlinear budget constraints and labour supply: results on female participation and hours’, Economic Journal, 93: 312–330.
Zabalza, A., Pissarides, C. and Barton, M. (1980) ‘Social security and the choice between full-time work, part-time work, and retirement decisions’, Journal of Public Economics, 14: 245–76.
Editor information
Editors and Affiliations
Copyright information
© 1990 National Economic Development Office
About this chapter
Cite this chapter
Bowen, A., Brewer, D., Mayhew, K. (1990). Incentives for the Low-Paid: Setting the Scene. In: Bowen, A., Mayhew, K. (eds) Improving Incentives for the Low-Paid. Palgrave Macmillan, London. https://doi.org/10.1007/978-1-349-21012-1_1
Download citation
DOI: https://doi.org/10.1007/978-1-349-21012-1_1
Publisher Name: Palgrave Macmillan, London
Print ISBN: 978-0-333-52545-6
Online ISBN: 978-1-349-21012-1
eBook Packages: Palgrave Economics & Finance CollectionEconomics and Finance (R0)