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Spatial heterogeneity in welfare reform success

Author

Listed:
  • Barbara Broadway

    (Melbourne Institute: Applied Economic & Social Research, The University of Melbourne)

  • Anna Zhu

    (RMIT University, Melbourne)

Abstract

We investigate if geography matters to the success of an exogenous change in a country's institutional settings. We examine the causal impact from one of the largest welfare reforms in Australia, which used the levers of reducing Income Support payments and increasing participation requirements, to reduce welfare dependency and to improve employment outcomes among single mothers. Using a new administrative dataset, which captures the full universe of single mothers targeted by this reform, along with information from five other data sources, we find significant heterogeneity in the reform effects by geography. The reform did not have the intended effect in geographic regions that were relatively disadvantaged. The effect of the reform for all the local labour market in Australia is estimated with Regression Discontinuity models and correlated with the characteristics of the local labour market region. Our aim is to ask: is there spatial heterogeneity in the local reform effects? And if so, can we find patterns that describe how the reform’s effectiveness varies with local conditions such as employment opportunities, access to services, and community characteristics?

Suggested Citation

  • Barbara Broadway & Anna Zhu, 2023. "Spatial heterogeneity in welfare reform success," Melbourne Institute Working Paper Series wp2023n13, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne.
  • Handle: RePEc:iae:iaewps:wp2023n13
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    References listed on IDEAS

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    More about this item

    Keywords

    welfare reform; earnings; disadvantage; spatial heterogeneity;
    All these keywords.

    JEL classification:

    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)

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