Welfare reform and the labour supply of lone parents in Australia: A natural experiment approach

Abstract

Large shifts in the labour supply of lone parents in Australia were observed between 1986 and 1990. Changes in the observed characteristics of lone parents explain only a small portion of these shifts. Propensity score matching and difference-in-differences are used to estimate the effects of the substantial policy shifts implemented in 1987. Control groups are constructed from the sample of married mothers. Results suggest that the policy reforms caused a substantial increase in the employment of lone parents while causing a reduction in the hours of work among the workers. © 2004. The Economic Society of Australia.