1 Introduction 2

2 Three decades of reform to work incentives in the UK 6

  2.1 The UK welfare system 6

  2.2 Reforms and trends 9

    2.2.1 Disability benefits 12

    2.2.2 Childcare subsidies 12

    2.2.3 Impact on incomes 12

3 Three Decades of Change Across Cohorts 13

  3.1 Data sources 13

  3.2 The data measurements 14

4 The Dynamic Labor Supply Model 21

  4.1 Overview of the model 21

  4.2 Elements of the model 22

  4.3 Utility and value functions 26

5 Estimation 28

6 Estimation results 30

7 Model fit and interpretation 36

  7.1 Hourly wages 36

  7.2 Employment and working hours 38

  7.3 Benefit receipt 39

  7.4 Some model implications 39

8 Policy Counterfactuals 46

9 Conclusions 51