Melbourne Institute of Applied Economic and Social Research - Research Publications

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    Health status and labour force participation: evidence from Australia
    Cai, LX ; Kalb, G (JOHN WILEY & SONS LTD, 2006-03-01)
    This paper examines the effect of health on labour force participation using the Household, Income and Labour Dynamics in Australia (HILDA) Survey. The potential endogeneity of health, especially self-assessed health, in the labour force participation equation is addressed by estimating the health equation and the labour force participation equation simultaneously. Taking into account the correlation between the error terms in the two equations, the estimation is conducted separately for males aged 15-49, males aged 50-64, females aged 15-49 and females aged 50-60. The results indicate that better health increases the probability of labour force participation for all four groups. However, the effect is larger for the older groups and for women. As for the feedback effect, it is found that labour force participation has a significant positive impact on older females' health, and a significant negative effect on younger males' health. For younger females and older males, the impact of labour force participation on health is not significant. The null-hypothesis of exogeneity of health to labour force participation is rejected for all groups.
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    The Effect of Financial Incentives on Labour Supply: Evidence for Lone Parents from Microsimulation and Quasi-Experimental Evaluation
    CAI, L ; KALB, G ; TSENG, Y ; VU, THH (Institute for Fiscal Studies, 2008-06)
    The aim of this paper is to analyse the work incentive effects of a change in the Australian tax and transfer system on lone parents in July 2000. To evaluate the effect of the total change only, microsimulation can be used; but for a subgroup of lone parents, a few components of this policy change can be analysed through two alternative approaches - microsimulation and quasi-experimental evaluation. Both approaches examine the effects on the probability of employment and on average working hours. The results from microsimulation 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 lone parents to a moderate extent. The estimated effect on average working hours when using microsimulation is very close to the effect estimated in a quasi-experimental approach using matching techniques to control for alternative influences.