This report provides a quantitative evaluation of the extra employment allowance for single parents. The purpose of the evaluation is to examine whether the extra employment allowance has increased the labour supply of single parents in the short term. The evaluation has been prepared for the Ministry of Taxation.
The method that is used in investigating whether a labour supply effect can be measured from the extra employment allowance is to compare the wage trend from 2013 to 2015 for single parents with a matched control group of single people without children who are thus not eligible for the extra employment allowance.
Labour market participation for single parents increased by 3-5% relative to single people without children during the period 2013-2015.
- For single parents who receive a larger allowance by increasing the labour supply, the employment allowance has resulted in an increase in the annual income of approx. DKK 8,000-10,000 compared to single people without children.
- For single parents who do not receive a larger allowance by increasing the labour supply, the employment allowance has increased their earned income by approx. DKK 11,000-13,500.
However, there is some uncertainty associated with the results and, for example, the labour supply effects become insignificant if the control group consists of married people/cohabitants with children rather than single people without children.
The study is commissioned by the Danish Ministry of Taxation.
Højbjerre Brauer Schultz (2016): "Evaluering af ekstra beskæftigelsesfradrag for enlige forsørgere".