Labour market flexibility in Scotland and the new parliament’s income tax varying powers

This paper examines the implications of increased labour market flexibility in the form of part-time work for the 'Scottish public finances' in the context of devolution and the establishment of a Scottish Parliament with tax varying powers. The labour market/public finance implications of increased flexibility are discussed. The Scottish situation is then analysed using an integrated spreadsheet model which calculates the net contributions (taxes minus benefits) of different household types. The findings show that a substitution of part-time for full-time jobs has the potential to seriously erode households' net contributions and so exacerbate the existing structural deficit in the Scottish public finances.