Understanding the mechanisms of in-work benefits: Can they improve employment retention among lone parents?

Background

In the last couple of decades, welfare-to-work policies for lone parents have gained considerable momentum in much of the Western world, partly due to the rise of in-work benefits. In the UK alone, this period has seen numerous reforms to the system of in-work benefits, alongside expanded access to affordable childcare and flexible working arrangements.

However, financial incentives aimed at getting people into work are likely to be of limited value if they do not result in those individuals continuing in employment. Traditionally policies in the UK have focussed on getting people into work, and there has been much less attention paid to supporting people once employment has been found.

This research seeks to further explore whether time-limited in-work benefits can encourage job retention particularly amongst lone parents.

Project aims

The researchers investigate the impact of the two recent time-limited in-work benefits that were payable to lone parents: In-Work Credit (IWC) and the financial incentives that were part of the Employment Retention and Advancement (ERA) demonstration.

They go on to assess which in-work benefits – and which specific features of them – are most likely to foster job retention among lone parents.

The project aims to:

• explore whether IWC and ERA reduce the length of lone parents’ unemployment spells and increase the length of their employment spells
• analyse how much of the effect on employment generated by these policies reflects higher entry to employment and how much reflects higher retention in employment
• explore which type of in-work benefit has the greater effect on employment retention, and why

Data from the Department for Work and Pensions’ Work and Pensions Longitudinal Study (WPLS) is used to provide information on benefit receipt, tax credit payments, employment spells and annual earnings.

The researchers analyse the length of employment spells and how they are affected by the receipt of in-work benefits. Making use of innovative methods, the team analyses the transitions people make between different employment states, and how these transitions are affected by different in-work benefits.

The Nuffield Foundation is an independent charitable trust with a mission to advance social well-being. It funds research that informs social policy, primarily in Education, Welfare, and Justice. It also funds student programmes that provide opportunities for young people to develop skills in quantitative and qualitative methods. The Nuffield Foundation is the founder and co-funder of the Nuffield Council on Bioethics and the Ada Lovelace Institute. The Foundation has funded this project, but the views expressed are those of the authors and not necessarily the Foundation. Visit www.nuffieldfoundation.org

Project website

http://www.nuffieldfoundation.org/can-work-benefits-improve-employment-among-lone-parents