My research interests lie at the intersection of public economics, labour economics, household finance and economic data science.
With Mike Brewer. Published in Fiscal Studies, 2018, Vol. 39, No. 1, pp. 5–38.
Personal taxes and benefits affect the incentive to work over the life-cycle by altering income–age profiles, insuring against adverse shocks and changing the returns to human capital. In this paper, we show how a life-cycle perspective alters our impression of how the UK tax and benefit system affects women's work incentives. Given that actual longitudinal data conflate age effects, cohort effects and policy effects, and, in the UK, are not available covering the full life-cycle, we use simulated data produced by a rich, dynamic structural model of female labour supply and human capital that incorporates family formation and fertility. We find that individuals experience considerable variability in work incentives across life that outweighs the variability across individuals. Changes in the presence of children and a partner, as well as the level of any partner's earnings, are key to explaining these patterns: work incentives vary dramatically depending on family composition and the earnings of any partner, especially for the lower‐skilled, and most women experience a number of different family types during the course of their lives.
With Barra Roantree. Published in the Journal of Economic Inequality, 2018, Vol. 16, No. 1, pp. 23–40.
Most analyses of inequality and tax and benefit reforms are based on measures of individuals’ circumstances at a point in time. But strong age-profiles in earnings, among other characteristics that the tax and benefit system conditions upon, combined with individuals’ ability to transfer resources across time suggests that measuring circumstances over longer horizons may lead to a very different picture. In this article, we consider how our impression of inequality and the tax and benefit system changes when the horizon under consideration is extended. We show that inequality is lower, redistribution less extensive, and benefit receipt far more widespread from a longer-run perspective. The choice of accounting period can also lead to a very different assessment of the distributional impact of policy reforms. Our results show the importance of policymakers explicitly considering what it is they are trying to achieve through redistribution: the alleviation of short-run hardship or the reduction of lifetime inequality. While there may be good reasons to pursue both objectives, the group of people affected and the appropriate policy response will differ depending on which is prioritized.
With Richard Blundell, Monica Costa Dias and Costas Meghir. Published in Econometrica, 2016, Vol. 84, No. 5, pp. 1705–1753.
We estimate a dynamic model of employment, human capital accumulation—including education, and savings for women in the United Kingdom, exploiting tax and benefit reforms, and use it to analyze the effects of welfare policy. We find substantial elasticities for labor supply and particularly for lone mothers. Returns to experience, which are important in determining the longer‐term effects of policy, increase with education, but experience mainly accumulates when in full‐time employment. Tax credits are welfare improving in the U.K., increase lone‐mother labor supply and marginally reduce educational attainment, but the employment effects do not extend beyond the period of eligibility. Marginal increases in tax credits improve welfare more than equally costly increases in income support or tax cuts.
With Peter Levell. Published in the International Journal of Microsimulation, 2016, Vol. 9, No. 2, pp. 5–40.
In this paper we discuss two alternative approaches to constructing complete adult life-cycles using data from an 18-year panel. The first of these is a splicing approach—closely related to imputation—that involves stitching together individuals observed at different ages. The second is a microsimulation approach that uses panel data to estimate transition probabilities between different states at adjacent ages and then simulates a large number of individuals with different initial values. Our aim throughout is to construct life-cycle profiles of employment, earnings and family circumstances that are representative of UK individuals born between 1945 and 1954. On balance, we find the microsimulation approach is to be preferred because it allows us to correct for observable differences across cohorts, and it is more amenable to counterfactual modelling.
Published in the Stata Journal, 2015, Vol. 15, No. 2, pp. 501–511.
Stata is a powerful and user-friendly package for setting up data and performing statistical analysis. Nevertheless, some features often cause unexpected errors that users either fail to notice or spend hours trying to correct. In this article, I list my top 10 Stata "gotchas" and suggest ways to combat them. Awareness of these "gotchas" will hopefully help newer users—particularly those making their first forays into Stata programming—avoid the most common pitfalls.
With Arun Advani and William Elming. IFS Working Paper W17/24, 2017.
Understanding tax non-compliance and the effectiveness of strategies to tackle it is crucial for a modern tax authority. In this paper we study how and why audits impact reported tax in the years after audit—the dynamic effect—for individual income taxpayers. We exploit data from a random audit program covering almost 35,000 income tax self assessment returns in the UK. We show that audits raise reported tax liabilities for at least five years after audit, with the magnitude of the impact declining over time. In total this raises an additional £1,230 per audited individual in the five years after audit, 1.5 times the direct revenue raised from the audit. Looking by income source, we see that the magnitude of the initial impact is lower for income components which are third party reported, and the impact declines more quickly for components that are more volatile. We develop a model to allow us to distinguish different mechanisms that might explain the presence of dynamic effects, and show our findings can only be explained by audits providing improved information to the tax authority.
With Peter Levell and Barra Roantree. IFS Working Paper W17/17, 2017.
This paper examines the distributional impact of increases to out-of-work transfers, increases to work-contingent transfers, and increases in higher rates of income tax over the whole of life. We find that, in contrast to what is implied by standard snapshot analyses, increases to work-contingent benefits are just as effective at redistributing resources to the lifetime poor as increases to out-of-work benefits. This has important implications for the equity-efficiency trade-off typically thought to apply to work-contingent transfers. However, we find that higher rates of tax on annually assessed income are an effective way of targeting the lifetime rich, as incomes are more persistent towards the top of the distribution. Our results illustrate the importance of moving beyond an exclusively snapshot perspective when analysing tax and transfer reforms.
With Chris Belfield, Teodora Boneva and Christopher Rauh. IFS Working Paper W16/13, 2016.
We study students’ motives for educational attainment in a unique survey of 885 secondary school students in the UK. As expected, students who perceive the monetary returns to education to be higher are more likely to intend to continue in full-time education. However, the main driver is the perceived consumption value, which alone explains around half of the variation of the intention to pursue higher education. Moreover, the perceived consumption value can account for a substantial part of both the socio-economic gap and the gender gap in intentions to continue in full-time education.
With Stuart Adam. IFS Report R113, 2016.
Individuals in the UK can save in many forms, such as bank accounts, pensions, housing, shares and Individual Savings Accounts (ISAs). The tax treatment of these different vehicles and underlying assets varies widely and this can affect the attractiveness of saving in different forms for people in different circumstances. In this report we describe the forms in which household wealth is held, set out the effects of the current UK tax system on the incentive to save in different assets, consider the implications of a number of current or potential reforms, and analyse the effect of non-tax features on the attractiveness of investing in different assets.
With Joel Slemrod and John Whiting. Published as Chapter 12 of Dimensions of Tax Design, 2010.
Assessing how much tax people owe and ensuring it is paid is a costly activity for both taxpayers and the government. Yet modern ‘optimal tax theory’ has for the most part ignored these costs and has focused on those created by distorting people’s behaviour (distortion costs). The first half of this chapter shows how it is possible to adapt the standard framework to reflect administration and compliance costs, and include real-world features of tax administration such as penalties for tax evasion, enquiry rates, and obligations to report information to the tax authority. The remainder of the chapter applies the resulting insights to current issues in UK tax implementation.
With Haroon Chowdry and Costas Meghir. Research Report for the Low Pay Commission, 2009.
This report explores the suitability of equilibrium search models to analyse the impact of minimum wages on the labour market outcomes of young workers. Such a modelling approach has not been widely considered before in the context of minimum wages for the UK, but it holds the potential for providing new insights into the impact of minimum wages. However, the report finds that these models are not currently sufficiently sophisticated to incorporate all the necessary features for a sensible analysis, and therefore concludes by providing a set of recommended developments and modifications to be pursued in future work.