Rents and work incentives

Authors: Elaine Kempson, Michael White, Josh Forth
Funded by: Department of the Environment, Department of Social Security
Published by: Policy Studies Institute
Publication date: 1997
ISBN: 0853747342

This report is based on desk research and provides an improved understanding of the factors that influence the labour supply decisions of tenants and the role that changes in rent levels might play within these.

The report finds that the great majority of tenants are, potentially, affected by work disincentives, and social tenants are more affected than those who rent in the private sector. The higher the rent, the more likely tenants are to be drawn into the poverty trap created by the interaction between benefits and net earnings.

In practice, however, behaviour is rather more complicated than either economic theory or hypothetical analyses of unemployment and poverty traps might suggest. A wide range of factors, including rents, interact in different circumstances to influence individuals’ decisions about work and earnings.

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