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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.