chapter  3
48 Pages

A Historical Analysis of Labour Supply Incentives

WithDon M. Egginton

This chapter examines the budget constraints and associated labour supply incentives of a married man with 2 children are chronicled between April 1960 and April 1982. It explores the series from 1948 to 1982 is a replacement ratio and is consistent with the budget constraints calculated for the period 1960-1982. The budget constraints of a married man with 2 children for each year between April 1960 and April 1965. The relatively high level of the income tax threshold and the lower earnings limit imply that there is a zero marginal tax rate operating over a short section of the Budget constraint. In summing up, the period 1960 to 1965 saw, for the most part, only minor changes in the budget constraints of a married man with 2 children. This was due to the unchanged structure and the tendency for changes in benefits to be offset by changes in the tax thresholds and wage rates.