The In-Work Benefit Calculation and Work

1. Diana Kasparova Policy Studies Institute CRSP 2006 The In-Work Benefit Calculation and Work

2. Background to research • The goal - reducing child poverty and having 70% of lone parents (LP) in work by 2010 • Initiatives aimed at moving LPs and couples from welfare to work and at encouraging them to stay in work include LPWFI • Provision of the financial incentives to work and communicating this through IWBC during a LPWFI • Worklessness among lone parents fell from 60% to 49% between 1996 and 2002

3. Structure of presentation • Aim of research and research questions • Data (LPWFI survey and admin) • Challenges and preliminary investigation • Methods of analysis • Findings and conclusions • Policy implications • Remaining questions

4. Aim of research and research questions • Explore the association between IWBC and work outcomes • Work outcomes – likelihood of work entry and speed of work entry • Five IWBC outcomes • Two LP groups: new/repeat and existing claimants

5. Data • LPs that are eligible for LPWFI in 2001: • new/repeat (flow) claimants of IS with youngest child aged 5 years and 3 months up to 16, • existing (stock) claimants of IS with younger child aged between 13 and 15 years 9 months • LPWFI survey – the main source of data • Administrative data, mainly on claimants’ children

6. Challenges • Consistency of IWBC delivery across clients, jobs, JC+ • ‘Conflation’ of IWBC with other LPWFI elements • Relationship between the number of IWBC and work entry both positive and negative • Policy differs between new and existing claimants and their characteristics differ (see preliminary investigation)

7. Preliminary investigation 1 • Flow claimants as likely to get IWBC as stock ones • But flow LPs are more likely to enter work and tend to enter work more quickly • Receiving IWBC has a limited impact on work outcomes? Other factors more important to work outcomes?

8. Preliminary investigation 2 • Both flow and stock LPs who received IWBC are more likely to achieve work outcomes than those who did not • Those who got IWBC (both flow and stock LPs) differ from those who did not in demography, health status, ‘human capital’, desire to work • Same differences between those who moved into work (both flow and stock LPs) and those who did not • Same differences between flow and stock LPs

9. Implications • Claimants’ characteristics may affect both IWBC receipt and work outcomes • IWBC outcomes rather than receiving IWBC may be associated with work outcomes • Need to exclude those without IWBC • Need to focus on IWBC outcome at initial LPWFI • Need to focus on the first 12 months after initial LPWFI

10. Methods of analysis • Separate analyses for flow and stock LPs • Likelihood of (first) work entry within the first 12 months– Probit • Days to (first) work entry within the first 12 months– continuous duration analysis • Covariates: IWBC outcome (5 models), characteristics of claimants (demo, education, barriers to work, region, etc.)

11. Findings - IWBC

12. Findings – Work entry • Flow LPs • 40% entered work • desire to work prompts work entry • barriers to work relate to caring responsibilities, children and childcare • no difference between the models depending on whether better off by more than £20 or £40 a week • but some differences between those with positive IWBC outcome and those with any IWBC outcome • and importance of £21+ outcome among those with positive IWBC outcome

13. Findings – Work entry • Stock LPs • 29% entered work • desire to work prompts work entry • barriers to work relate to lack of skills/confidence and health • those with positive IWBC outcome face fewer barriers than those with any IWBC outcome • but not much difference between the models depending on whether better off by more than £20 or £40 a week

14. Findings – Time to work • Flow LPs • 99 days to first work entry on average • positive IWBC outcome prompts work entry • among those with positive IWBC, speed is greater if better off by more than £40 a week • overall, those with financial concerns tend to postpone their work entry unless their IWBC outcome exceeds £20 a week • barriers to work relate to age of LPs, number of their children and caring responsibilities • older age of the youngest child and the desire to work speed up LPs work entry • statistical significance of non-recall

15. Findings – Time to work • Stock LPs • 135 days to first work entry on average • those with positive IWBC outcome differ from those with any IWBC outcome in barriers to work they face • the desire to work speeds up LPs work entry • if those with financial concerns are told to expect to be better of by £21+ a week they tend to enter work more quickly than those without financial worries

16. Conclusions • Differences between flow and stock LPs in: • association between IWBC and work • barriers to work • Similarities between flow and stock LPs with a positive IWBC outcome in: • desire to work • financial worries seem to be addressed if IWBC outcome is £21+ a week (the speed of work entry) • Caring responsibilities (the speed of work entry)

17. Policy implications • Policy measures should differ between existing and new/repeat client groups • They should target various and specific barriers to work • They need to account for heterogeneity of each group (flow and stock) and some similarities between those with positive IWBC • Stock LPs are likely to be harder to reach than flow LPs, hence may require more resources

18. Remaining questions • Same results: • if the time period is extended? • if the IWBC delivery process, survey design and data quality (esp on children) are improved? • if another cohort of LPs is considered? • IWBC or some other LPWFI elements have an impact on work outcomes?

19. Thank you