Does reducing child benefits mean parents work more? A mixed-methods study of the labor market effects of the United Kingdom’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 (2025) Does reducing child benefits mean parents work more? A mixed-methods study of the labor market effects of the United Kingdom’s "two-child limit". Social Service Review. ISSN 0037-7961

Text (ssr_accepted_two_child_limit_employment) - Accepted Version Repository staff only until 7 February 2026. Available under License Creative Commons Attribution Non-commercial. Download (1MB)

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 any mitigation of child poverty. We examine the employment effects of a substantial benefit cut affecting larger families in the United Kingdom. The “two-child limit” restricted means-tested child benefits to two children only, affecting new births from April 2017. Using difference-in-differences models, we find no effect on employment at the extensive margin. Among coupled mothers already working, but not lone parents, we find small increases in working hours. Qualitative research with affected families helps make sense of these limited effects, indicating inelastic labor market responses resulting from a strong commitment to unpaid care, the challenges of caregiving responsibilities, and gaps in suitable child care. We further find that hardship linked to the policy may make labor market engagement harder for some parents.

Item Type:	Article
Additional Information:	© 2025 The University of Chicago
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:	17 Feb 2025 09:03
URI:	http://eprints.lse.ac.uk/id/eprint/125878

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