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The Influence of Psychological Well-being, Ill Health and Health Shocks on Single Parents' Labour Supply

  • Alan S Duncan


    (Bankwest Curtin Economics Centre (BCEC), Curtin University)

  • Mark N Harris


    (School of Economics and Finance, Curtin University)

  • Anthony Harris

    (Centre for Health Economics (CHE), Monash University)

  • Eugenio Zucchelli


    (University of Lancaster, UK)

This paper proposes a discrete-choice behavioural model of labour supply to examine the role of ill-health on single parents’ employment. The model provides estimates of individual preferences over a given set of labour market states and allows these preferences to be influenced by a measure of mental health, a latent health index purged of reporting bias and various measures of health shocks. Exploiting longitudinal data from the HILDA Survey, we find that psychological well-being, ill-health and health shocks significantly influence single parents’ marginal disutility of work and marginal utility of income. Further, we apply behavioural microsimulation methods to estimate the likely labour supply responses among single parents in Australia from restricting eligibility to access disability support via the Australian Disability Support Pension (DSP) scheme. Our simulation exercise reveals that imposing tighter DSP eligibility rules has a moderate but positive effect on single mothers’ employment.

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Paper provided by Bankwest Curtin Economics Centre (BCEC), Curtin Business School in its series Bankwest Curtin Economics Centre Working Paper series with number WP1307.

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Length: 31 pages
Date of creation: Jul 2013
Date of revision:
Handle: RePEc:ozl:bcecwp:wp1307
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