The Labour Supply, Unemployment and Participation of Lone Mothers in In‐Work Transfer Programmes

In‐work transfer schemes have recently been suggested as a device for encouraging labour force participation and reducing the severity of the disincentives associated with out‐of‐work income support schemes. Here we estimate a discrete choice labour supply model which allows for endogenous in‐work welfare programme participation. We also allow for involuntary unemployment so as to distinguish between programme non‐participation and an inability to obtain work and thereby generate an eligibility to the programme.