There is no evidence that capping child benefits increases employment, a new study has found.
The Government's two-child benefit limit, which restricts welfare payments to larger families, has failed to increase employment levels, researchers from the London School of Economics say.
The new paper, titled Making Work Pay? The labour market effects of capping child benefits in larger families, found instead that the policy was ‘counter-productive’ and pushed people ‘further away from the labour market.’
According to the researchers, the two-child limit fails to recognise why parents in larger low-income families prioritise caring responsibilities over work and it overlooks the challenges associated with seeking employment while caring for young children.
‘Labour market activity among larger families seem to be particularly “sticky” in response to reductions in benefits income, likely due to parents’ commitment to unpaid care, the scale of caregiving responsibilities and barriers to paid work,’ the paper says.
‘Our qualitative evidence also indicates that the effects of negative income shocks can render such policies counter-productive by pushing people further away from the labour market.’
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