Centrum Analiz Ekonomicznych

Working Paper 01/16

Estimating Labour Supply Response to the Introduction of the Family 500+ Programme.

Michał Myck

Abstract:

We use a discrete choice labour supply model (van Soest, 1995; Blundell et al., 2000) to estimate labour supply implications of a large scale reform of financial support for families with children in Poland, the so-called Family 500+ programme. The reform introduced universal regular payments of 500 PLN per month for each second and subsequent child in the family aged 0-17, supplemented with means-tested 500 PLN per month for the first child in low income households. As such, the programme significantly changed the balance of financial incentives to work among parents. We estimate that it will reduce labour supply among families with children by about 240,000 individuals, principally mothers in families with one or two children. The estimates suggest that labour supply effects will be felt most strongly in small towns and villages and will contribute substantially to the reduction of the proportion of couples in which both partners are working.

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