Employment

The increased adoption of means-tested benefits and tax credits in the UK and elsewhere has refocused employment policy on creating incentives for lower-skilled individuals to gain and retain employment. This has been the subject of increased attention in our research.

Ageing of the population has also focused attention on incentives for early retirement in the benefit and pension systems. Quantifying their impact is essential in designing effective policy and evaluating policy reform. IFS has carried out extensive modelling of labour supply decisions, and these models are being developed further to address important new tax, benefit and pension policy questions.

There are three main areas where further development is planned. First, labour supply decisions within the family. This area is particularly relevant given the growing importance of in-work benefits and childcare subsidies. Second, incentives in the tax and welfare system for employment retention and earnings enhancement once in the labour market. This is closely allied to the issue of wage progression and our research on human capital accumulation. Third, labour supply decisions for older workers and the complex interactions between early retirement incentives in pension systems, incapacity benefit rules and working opportunities for older people.

How do the rich respond to higher income tax rates?

| Observations

This Briefing Note presents new analysis of how high income taxpayers respond to changes in income tax rates. The Note is based on three new Working Papers, funded by the Nuffield Foundation, the Economic and Social Research Council and the European Research Council.

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Estimating the size and nature of responses to changes in income tax rates on top incomes in the UK: a panel analysis

| Working Paper

Estimating the size and nature of responses to changes in income tax rates on top incomes in the UK: a panel analysis*

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Updating and critiquing HMRC’s analysis of the UK’s 50% top marginal rate of tax

| Working Paper

Updating and critiquing HMRC’s analysis of the UK’s 50% top marginal rate of tax

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