The Impact of Family Assistance Changes on Patterns of Unemployment Benefit Receipt

Abstract

The last decade in Australia has seen a major expansion of income support to low income non-pensioner/beneficiary families with children. One of the major goals of this increased support has been to increase the relative financial attractiveness of low wage employment for people with dependent children, and to thus encourage those unemployed with larger families to increase their job search effort. This paper examines this objective by first describing the changes in effective unemployment benefit replacement rates over the 1980s, and then by testing whether these changes have been associated with any changes in the relative unemployment rates of men with different numbers of children. The main conclusion is that these changes have not had any discernible behavioural impact. This may be due to either a small degree of response to financial incentives, or possibly to a lack of knowledge of the income support payments available.