Channels of labour supply responses of lone parents to changed work incentives

Abstract

In this article, we investigate the response of female lone parents to two reforms to the welfare system in Australia. Using childless single women as a control group, we find the first set of reforms increased hours worked substantially through job changes. The second set had much more modest effects on hours, which included a decrease in hours worked for those with children younger than six, but did effect an increase in participation. Our results highlight the heterogeneity of response of lone parents to welfare interventions and provide support for the importance of accounting for fixed costs and for within-job rigidities.