Work experience has been found to be a key determinant of work and wages for educated women, but it seems to play a smaller role for the less educated. For them, welfare, tax credits and family composition matter more, and increasingly so does participation in disability programmes. Here we document how labor supply, wages, health, and disability claims have evolved in the UK over the last three decades, and examine how reforms to tax credits, disability benefits and other welfare programs have changed work incentives over this period. We then introduce these features into an empirical dynamic structural model of life-cycle labor supply, human capital and disability benefit application, in which human capital combines health capital, experience accumulated in work, and education. Estimating the model on a panel of working-age women in the UK, we examine the interactions between experience capital and health capital in driving life-cycle earnings across different education groups. Our results highlight the importance of interactions in the disability benefit, welfare and tax-credit systems for understanding the life cycle pattern of hours, employment, earnings, and disability claims, and for evaluating policy counterfactuals.

Applicants for disability benefits face a long wait for a decision, and uncertainty in how long the wait will last and its resolution – award or rejection. Both forms of uncertainty creates a substantial barrier to smoothing consumption. Using transaction-level bank data on UK disability benefit recipients, and instrumenting waiting time with variation in local assessment centre backlogs, we find that applicants do not spend in anticipation of an award, even when they have liquidity. At approval, spending on durables spikes sharply, while total spending increases to a permanently higher level. We build a calibrated model with durable and non-durable goods to match these patterns, and use it to illustrate the welfare cost of delayed resolution, including how much benefit income individuals would be willing to forgo in exchange for a faster decision. Finally, these costs are not offset by better targeting; we find no evidence that longer waits improve screening of applicants.

We study the importance of family income in early childhood for children’s school readiness, exploiting the introduction of the two-child limit in the UK benefit system. Under the policy, families claiming universal credit or child tax credit receive no child element for third and subsequent children born on or after 6 April 2017. Around 60% of families with a third or later child under five have their entitlements reduced at any given time, and across all such families the average loss is around £10,200 over the child’s first five years. Using linked administrative education and health records for England, and a regression discontinuity design comparing third and later children born just before and just after the cut-off, we find no statistically significant effect on the share of children reaching a ‘good level of development’ at age five, and can rule out falls of more than 0.9 percentage points. We likewise find no evidence of effects among groups most exposed to the policy, such as children from families receiving free school meals before the reform or those living in the most deprived areas.

Proponents of work search requirements for out-of-work welfare claimants argue they are effective in inducing individuals to work and delivering fiscal savings. In this paper, we provide a much more comprehensive assessment than has been available to date, exploiting a UK reform introducing full-time work search requirements for single out-of-work parents. Using the policy’s staggered roll-out, we show that the reform reduced the number of single parents claiming welfare by a quarter, partly by discouraging eligible individuals from beginning a claim in the first place. However, only about half of the reduction in the number of claimants is explained by higher employment, and almost all of that is in part-time, low paid jobs – the median marginal job pays around the 13th percentile of the UK earnings distribution, so even those that get into work pay little in tax and receive significant (in-work) transfers. Most of the rest of the effect is accounted for by individuals substituting to – more generous – incapacity and disability benefits. As a result, the policy produces fiscal savings indistinguishable from zero. Furthermore, we find negative effects on the mental health of individuals who remained out-of-work, though positive effects for those pushed into work.

In many developed countries the welfare system is comprised of a number of separate programmes, such as unemployment, housing, and child-contingent benefits, with claimants often entitled to more than one at once. This creates high marginal tax rates as multiple benefits are withdrawn as earnings increase, and means claimants incur the transactions costs of applying for multiple benefits to get their full entitlement. Several countries are considering benefits integration, and the UK has gone the furthest, integrating six benefits into one – Universal Credit – with the goal of raising employment. We assess the consequences of benefit integration on labour supply and take-up, using Universal Credit as an example. To do this we build a model of household labour supply with take-up decisions across multiple benefits. We find that integration has two offsetting effects on labour supply. First, by removing the highest effective marginal tax rates, it tends to increase labour supply. But, second, because higher earnings usually result in entitlements to fewer benefit programmes, integration’s effects on reducing transactions costs of claiming are particularly strong at low levels of earnings, tending to reduce labour supply.

We study how employer concentration affects job design, focusing on schedule flexibility as a non-wage job attribute. Using the full text of 46 million UK job vacancies from 2014–2019, we construct new measures of flexible work arrangements using supervised machine learning and large-language-model—assisted annotations. Adopting an instrumental variable strategy using a Bartik-style prediction of the change in employer concentration based on nationwide hiring trends, we show that higher concentration reduces the value of worker compensation partly through shifts toward “risky” flexibility that exposes workers to earnings volatility.

Is work a reliable route out of poverty, and what does that depend upon? In Britain, the headline relative poverty rate for those in working households steadily rose from 13.4% in 1994–95 to 18.4% in 2019–20. We study the drivers of this increase. Significant rises in earnings inequality observed over the period were a modest contributor, accounting for 1.3 percentage points (pp). Higher earnings growth for poorer families did not reduce working poverty more substantially, in part due to the higher effective marginal tax rates that low-income families faced. A more important factor (1.8 pp) was rising housing costs for poorer working families compared with middle- or high-income families, driven both by rents rising relative to mortgages, and by a shift away from homeownership for poorer working families. Growth in pensioner incomes, which raised median income and therefore the relative poverty line, also increased the in-work poverty rate (1.7 pp). Reforms to the tax and transfer system—particularly the introduction of ‘tax credits’—served to slightly mitigate (0.6 pp) the rise in in-work poverty. These results show that the effectiveness of employment for reducing poverty is dependent upon a broad range of other factors—many of which themselves can be shaped by other policy levers.

Policymakers have increasingly turned to ‘in-work transfers’ to boost incomes among poorer workers and strengthen work incentives. One attraction of these is that labour supply elasticities are typically greatest at the extensive margin. Because in-work transfers are normally subject to earnings-related phase-outs, they tend to most strongly incentivize part-time work, weakening incentives to increase hours beyond that. But if part-time work generates relatively little in the way of human capital and career progression, then policy design should factor in the longer-term consequences of labour supply choices along the intensive margin. To that end, we use a dynamic model of female labour supply with endogenous human capital accumulation, and study actual and hypothetical welfare reforms in the UK. We show that for a given expansion in the government budget, those reforms that incentivize full-time work can do considerably more to increase incomes, including among poorer households, and to raise welfare. Our results suggest that in-work transfers could be refined by paying greater attention to the intensive margin effects through the design of their phase-outs.

We assess the impact of nationwide minimum wages on employment throughout the whole wage distribution by exploiting geographical variation in the level of wages. We find a substantial increase in wages at the bottom of the wage distribution, while we detect a small, statistically insignificant negative effect on employment. Combining the estimated change in the wage distribution with a tax and benefit microsimulation model, we show that the minimum wage generates considerable proportional income gains up to the middle of the household income distribution.

We review the effects of the COVID-19 pandemic on inequalities in education, the labor market, household living standards, mental health, and wealth in the United Kingdom. The pandemic has pushed up inequalities on several dimensions. School closures, in particular, disrupted the learning of poorer children, leading to lower attainment. Mental health worsened for those groups (women and younger adults) who had poorer mental health pre-pandemic. Lockdowns and social distancing particularly reduced the ability of younger, lower-earning, and less educated people to work. However, job-support programs combined with the expanded welfare system meant that, if anything, disposable income inequality fell. Rising house prices have benefited people around the middle of the wealth distribution. In the longer term, lower work experience and training for the less educated and missed schooling—particularly among children from more deprived families—could push up human capital inequalities and reduce social mobility.

In 2019, the employment rate among 25- to 64-year-olds in the UK reached 80 per cent – the highest on record, and considerably higher than the 76 per cent rate recorded shortly before the Great Recession. In this paper, we investigate the growth in employment between the eve of the Great Recession and the eve of COVID-19 across several dimensions. We analyse which sectors, demographic groups and regions accounted for the rise. We also investigate how job ‘quality’ – in both financial and non-financial terms – has changed. We find that almost all demographic groups and regions saw a rise in employment, especially those with low pre-existing employment rates and those near the bottom of the income distribution. Hourly pay growth was very weak over the period, with the median actually slightly falling. Other indicators of job quality show a more mixed picture: employees seem to have greater appreciation of their work and firm, but perceive less security and flexibility in their job.

Income inequality, as well as the impact of tax and benefit reforms on it, has typically been evaluated with respect to ‘snapshot’ incomes, measured over short periods such as one week or year. But longitudinal data allows long-run measures of income to be used, which will be of interest to policymakers interested in persistent, rather than only temporary, poverty. We show that the long-run distributional impact of a reform is the combination of three effects: a ‘static’ effect, which would be observed if individuals’ circumstances were consistent throughout their life; an ‘income dynamics’ effect, resulting from individuals moving around the income distribution over time; and a ‘tagging’ effect, resulting from the reform affecting individuals differently according to whether they have a characteristic predictive of long-run income conditional on current income. We propose a simple method to decompose these three effects for any inequality, poverty, or distributional statistic. We use the method to examine the distributional impact of the introduction of ‘Universal Credit’, the most important reform to the UK benefit system in decades. We show that Universal Credit is less regressive on a long-run basis than a snapshot one, partly because of income dynamics but also because it reduces entitlements for (or ‘negatively tags’) those who are more likely to find a period of low income to be temporary, rather than persistent.

The spatial voting theory literature has generally focused on either parties or candidates as the unit of analysis and ignored strategic interactions between them. I study a game theoretic spatial model of elections with many heterogeneous constituencies in which both party and candidate behavior are modeled. Parties choose a platform and a ‘whip rate,’ representing the proportion of final policy that will be made by the party, as opposed to by the successful candidates. Candidates are office-motivated and can choose both a platform and a level of advertising in order to defeat their opponent. It is shown that the introduction of whipping as a choice variable can cause party platforms to diverge and that parties will whip on some but not all issues, reflecting the empirical reality of parties influencing rather than determining policy outcomes exclusively. Further, parties respond to sharper voter polarization by reducing the power of the whip as well as distinguishing their platforms from one another, while more voter uncertainty has the opposite effect. Other real-world phenomena, including ‘safe seats’ and legislators voting with their party even when unwhipped, are also shown to be predicted by the model.

The UK government spends over £100 billion each year on working-age benefits, predominantly for those with low incomes or disabilities. Broadly, these payments protect families from hardship, reduce inequality, and support disabled people. But governments across the world and over time have designed these programmes in very different ways. We examine trends in benefit policy in the UK over time, including the treatment of work, support for children and housing costs, and the role of health-related benefits. We then provide a survey of the existing evidence on a wide range of questions in benefit policy design, including take-up, work incentives, and the impact on the next generation—and bring this evidence to bear on key UK policy questions.

Prevalence of disability and receipt of disability benefits have steadily increased among the UK’s working-age population in recent years. We examine inequalities in disability and its prevalence between educational groups, year of birth cohorts, regions and genders in the UK. Our analysis reveals significant disparities in disability rates across groups. In particular, disability is strongly related to education: those with lower levels of education have similar disability rates to those with degrees who are decades older than them. These gaps in disability rates open up early on in the life cycle, and while the prevalence of poor physical health increases steadily with age, we see the prevalence of poor mental health rising particularly fast among younger cohorts. These patterns in early life may have profound future implications for physical health and longevity. These results suggest that disability may be a key driver of inequalities across the life cycle.

We examine the living standards and health of working-age disabled people and disability benefits recipients over time in the UK. The UK’s disability benefits system (which is non-means-tested and in which receipt is unrelated to work status) has gone through a significant transformation since 2013 with the gradual replacement of the disability living allowance (DLA) with the personal independence payment (PIP). We establish four key facts. First, 6% of working-age individuals are now on disability benefits, up from 2% in 1992–93. This rise has been driven by claims for mental health and other psychiatric conditions, which are now the main disabling condition for 44% of claimants (27% back in 2002–03). Second, almost half of those in the most materially deprived tenth of the population are disabled, but most of that group do not receive disability benefits. Third, over the period that DLA has been replaced by PIP, a larger fraction of those with the poorest health have started to receive disability benefits, suggesting that the targeting of the benefits has improved on this margin. Fourth, simple event studies examining employment in the years around the reduction of disability benefits (following a government health reassessment) find no change before but a sharp (4 percentage point) rise immediately after loss of benefits, which grows to 10ppts four years after. This is not enough to offset the loss in income on average, and income poverty rises 10ppts in the year following the reduction. Nonetheless, we find limited evidence of claimants’ own assessment of their financial situation changing, suggesting that the benefits are removed at a time when they are less needed.