Introduction

The purpose of this chapter is twofold. First, to compare recent developments in making work pay policies for lone parents across the six countries featured in this book. Second, to contextualise those changes by reviewing the international comparative literature on the nature and impact of making work pay policies for lone parents. At one level, making work pay strategies entail the manipulation of the tax/benefit system, in such a way as to widen the differential between in-work and out-ofwork incomes in favour of the former. The underlying assumption is, of course, that the higher the potential in-work income is over the out-ofwork income, the greater the financial incentive facing lone parents to seek paid work, and in turn, the higher the rate of lone parents’ employment (Duncan and Edwards, 1999). The aim of a making work pay strategy, though, may extend beyond ensuring that the differential between inwork and out-of-work incomes is sufficiently large to stimulate lone parents’ labour market participation; it may also be concerned with ensuring that in-work incomes per se are sufficiently high so as to protect lone parents from the risk of poverty. In this chapter, we are concerned with making work pay strategies as both a mechanism to increase the rate of lone parents’ employment, and as a mechanism for reducing the rate of poverty among lone parents in paid work.

The chapter is divided into five substantive sections. In section one, we collate the information on recent developments in making work pay strategies from each of the national reports, and examine similarities and differences in such strategies across the countries. In order to compare the structure of financial incentives facing lone parents in those countries, it is necessary to draw on comparative data on the tax/benefit package. In section two, therefore, we present data from two sources – the York studies and the Organisation of Economic Co-operation and Development's (OECD’s) Benefit Systems and Work Incentives series – on the relationship between the value of in-work and out-of-work incomes for the six countries, as well as other countries. In section three, we draw largely on existing comparative studies to examine the relationship between the structure of financial incentives for lone parents and the employment rate among this group.