Lixin Cai () (Melbourne Institute of Applied Economic and Social Research, The University of Melbourne) Guyonne Kalb () (Melbourne Institute of Applied Economic and Social Research, The University of Melbourne) Yi-Ping Tseng () (Melbourne Institute of Applied Economic and Social Research, The University of Melbourne) Hong Ha Vu () (Melbourne Institute of Applied Economic and Social Research, The University of Melbourne)
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The aim of this paper is to analyse work incentive effects from a recent change in the Australian tax and transfer system on sole parents. Two approaches are used in the analysis: microsimulation and quasi-experimental evaluation. Both approaches examine the effects on the probability of employment and average working hours. The results from both approaches show that the combined changes introduced in July 2000 involving reduced withdrawal rates, changed family payments and lower income tax rates¯have increased labour supply for sole parents to a small extent. The results from microsimulation are slightly smaller than those estimated from a quasi-experimental approach using matching techniques to control for alternative influences. In addition, using microsimulation, the separate effects of the components can be estimated. It was found that reduced benefit withdrawal rates, a reduction in the withdrawal rates and abolition of the sudden death for family payments, and lower income tax rates all increased labour supply. However, the replacement of tax rebates with additional non-income-tested family payments is estimated to have a negative effect on labour supply.
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Paper provided by Melbourne Institute of Applied Economic and Social Research, The University of Melbourne in its series Melbourne Institute Working Paper Series with number
wp2005n10.
Length: 44 pages Date of creation: Jul 2005 Date of revision: Handle: RePEc:iae:iaewps:wp2005n10
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References listed on IDEAS Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
Richard Blundell & Hilary W. Hoynes, 2004.
"Has 'In-Work' Benefit Reform Helped the Labor Market?,"
NBER Chapters,
in: Seeking a Premier Economy: The Economic Effects of British Economic Reforms, 1980-2000, pages 411-460
National Bureau of Economic Research, Inc.
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