Does reducing child benefits mean parents work more? A mixed methods study of the labor market effects of the UK’s ‘two child limit’

Stewart, Kitty ORCID: 0000-0001-7744-8741, Andersen, Kate, Patrick, Ruth, Reader, Mary ORCID: 0000-0002-2154-1813 and Reeves, Aaron ORCID: 0000-0001-9114-965X (2024) Does reducing child benefits mean parents work more? A mixed methods study of the labor market effects of the UK’s ‘two child limit’. Social Service Review. ISSN 0037-7961 (In Press)

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Abstract

Child benefits can play an important role in supporting families during a life-stage of increased household needs. However, they may also have negative effects on parental work incentives, potentially limiting their impact on child poverty. We examine the employment effects of a substantial benefit cut affecting larger families in the UK. The ‘two-child limit’ restricted means-tested child benefits to two children only, affecting new births from April 2017. Using difference-in-difference models, we find no positive impact on employment rates, with some models even pointing to negative effects. Among coupled mothers who are already working we do find small increases in working hours. Qualitative research with affected families helps make sense of these limited effects, indicating inelastic labor market responses due to strong commitment to unpaid care, challenges of caregiving responsibilities, and gaps in suitable childcare. We further find that hardship linked to the policy may make labor market engagement harder for some parents.

Item Type:	Article
Additional Information:	© 2024
Divisions:	Social Policy Sociology
Subjects:	H Social Sciences > HD Industries. Land use. Labor H Social Sciences > HQ The family. Marriage. Woman H Social Sciences H Social Sciences > HB Economic Theory
JEL classification:	J - Labor and Demographic Economics > J0 - General > J08 - Labor Economics Policies J - Labor and Demographic Economics > J2 - Time Allocation, Work Behavior, and Employment Determination and Creation; Human Capital; Retirement > J22 - Time Allocation and Labor Supply I - Health, Education, and Welfare > I3 - Welfare and Poverty > I38 - Government Policy; Provision and Effects of Welfare Programs H - Public Economics > H3 - Fiscal Policies and Behavior of Economic Agents > H31 - Household J - Labor and Demographic Economics > J1 - Demographic Economics > J13 - Fertility; Family Planning; Child Care; Children; Youth
Date Deposited:	24 Oct 2024 14:48
Last Modified:	24 Oct 2024 14:57
URI:	http://eprints.lse.ac.uk/id/eprint/125878

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