Tackling poverty among lone mothers can play a crucial role in reducing the lifetime inequality in incomes faced by women, according to an analysis from the Institute for Fiscal Studies. The report also points out that the tax and benefits system inherited by the coalition in 2010 was 'particularly successful' in reducing income disparities for women during the main childbearing years.
- The tax and benefits system is more redistributive towards women from an annual than from a lifetime perspective, and is most progressive at the bottom of the income distribution in both cases.
- Family conditions under which working is especially costly, such as lone motherhood, are especially prevalent among the lifetime poor – even though such episodes may seem to be only transitory.
- The tax and benefits system – at least the one inherited by the current government – does succeed in promoting a redistribution of lifetime incomes to women by targeting such episodes, particularly by improving the work incentives of those with the lowest earning capacity.
- Changes that started with New Labour's working families tax credit in 1999, involving means-tested subsidies conditional on work and having children, are 'especially progressive' from a lifetime perspective.
- Other policies, such as universal benefits for family with children, are less well targeted towards the lifetime poor. But they are more progressive and improve the work incentives in the middle 60 per cent of the distribution of lifetime income.
Source: Mike Brewer, Monica Costa Dias and Jonathan Shaw, Lifetime Inequality and Redistribution, Working Paper 12/23, Institute for Fiscal Studies
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