Understanding of the income support system: a study of lone and couple mothers
Matthew Gray and Jennifer Renda
Australian Institute of Family Studies
Contact Email:   matthewgaifs.gov.au

A current policy debate is how the income support system can be modified to encourage employment amongst mothers in receipt of an income support payment. In particular there are concerns that the system does not generate sufficient financial incentives to take-up paid employment. Economic modelling of the disincentive effects of the social security system nearly always assumes that people understand the rules of the income support system and the way in which it operates. However, there is little evidence on whether this assumption is justified.

This paper, using survey data on 2,400 Australian mothers collected by AIFS in 2002 (the Family and Work Decisions Survey), explores lone and couple mothers’ understanding of the income support system and the impact of paid employment upon government payments. Information is also presented on the minimum wage and work hours non-working mothers would need to be offered in order accept a job. Information on understanding of the income support system is important for a range of reasons, including refining models of the incentive effects generated by the system and improving the design of the income support system.

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