In this paper we propose a tax and benefit reform to increase the working hours and to
decrease the welfare participation of single mothers in Sweden. We have access to highquality
tax and income data, and use a detailed tax-benefit program to generate precise
budget-sets. We formulate and estimate a structural, static model of labor supply and welfare
participation. The results suggest that labor supply among single mother households in
Sweden is quite elastic, and that there is self-selection into welfare. The proposed reform
would generate welfare-gains for virtually everyone in the sample, yet would be revenue
neutral.