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Abstract:

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CASE Paper
Expenditure Patterns Post-Welfare Reform in the UK: Are low-income families starting to catch up?
Paul Gregg, Jane Waldfogel and Elizabeth Washbrook May 2005
Paper No' CASE 099:
Full Paper (pdf)

JEL Classification: I3; J18


Tags: child poverty; family expenditures; welfare reform; difference-in-difference

In this paper we provide evidence on how the UK government’s welfare reforms since 1998 have affected the material well-being of children in low-income families. We examine changes in expenditure patterns and ownership of durable goods for low- and higher-income families between the pre-reform period (1995-1998) and the post-reform period (2000-2003), using data from the Family Expenditure Survey. The methodological approach is a difference-in-difference-in-difference analysis that exploits the fact that age variation in the reforms favoured low-income families over higher-income ones and families with children age under 11 over those with older children. We find that low-income families with children are catching up to more affluent families, in their expenditures and their possession of durable goods. Moreover, expenditures on child-related items are increasing faster than expenditures on other items.

This paper has been published as:
Family Expenditures Post-Welfare Reform in the UK: Are Low-Income Families with Children Starting to Catch Up?, Labour Economics, 13(6): 721-746, 2006