Research and analysis

Evaluating the labour market impact of Working Families' Tax Credit

An estimate of the labour market impact of Working Families’ Tax Credits using a difference-in-differences methodology

Document

HM Revenue and Customs Working Paper 4: Evaluating the labour market impact of Working Families’ Tax Credit using difference-in-differences

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Detail

HM Revenue and Customs Working Paper 4: Evaluating the labour market impact of Working Families’ Tax Credit using difference-in-differences

Working Families’ Tax Credit (WFTC) replaced Family Credit in October 1999 as the main component of state support for low income working families with children. WFTC was central to the government’s ‘Making Work Pay’ agenda, with the dual aims of improving incentives to work, and encouraging low-paid individuals to progress in the earnings distribution.

In this paper we attempt to estimate the labour market impact of Working Families’ Tax Credits using a difference-in-differences methodology.