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.