Research and analysis

Welfare-to-Work, Wages and Wage Growth

This paper considers how in-work income support programmes might impact on individual wage growth

Document

HM Revenue and Customs Working Paper 3: Welfare-to-Work, wages and wage growth

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Details

HM Revenue and Customs Working Paper 3: Welfare-to-Work, wages and wage growth

In-work welfare programmes aim to improve incentives for people without work to move into employment. From 1998 to 2003, in the United Kingdom, the Working Families’ Tax Credit (WFTC) has been one such income supplement programme.

This paper considers how the incentive effects of WFTC would impact on wages, and the growth in wages, of a given individual.

The WFTC was part of a range of policies that attempt to “make work pay”, but its proximate aim was to provide earnings supplementation for working low-wage families with children and so reduce child poverty.

Published 20 May 2004