Reservation Wages And The Earnings Capacity Of Lone And Couple Mothers: Are Wage Expectations Too High?

There is a great deal of policy and community concern about the growth in the number of working-age Australians in receipt of income support payments. Of particular concern is the increasing number of families with children in which no adult is employed. A focus of government policy is on increasing workforce participation rates of mothers in receipt of income support payments. A consistent theme in policy attempts to increase employment rates has been the importance of ensuring that there are adequate financial incentives to take up paid employment. Strategies to ensure that work pays involve the adjustment of the tax and benefit systems in order to widen the differential between in-work and out-of-work incomes in favour of in-work incomes.