AbstractsEconomics

Understanding the causes and implications of the trade-off between working and caring for young children is relevant to the policy goals of greater workforce participation, welfare burden reduction and gender equality. Essay 1 examines the longer-term employment impacts of variations in the time spent out of the workforce for partnered mothers with primary-school-commencing children. It uses Australian administrative data and exploits exogenous variations in workforce absence due to school entry age thresholds. This approach has never been used in the hysteresis literature but acts as a strong instrument for mothers who withdraw from the workforce until children begin school. We find that the initial employment gaps caused by variations in school starting age do not persist after controlling for child age, suggesting that partnered mothers are not subject to employment hysteresis. Essay 2 assesses the workforce participation costs of caring for larger families using Australian Bureau of Statistics (ABS) Census data. It accounts for the selection effects arising from the characteristics of mothers who choose to have larger families with an instrumental variables approach based on the gender-match of the first two children. Mothers who progress fertility beyond the second child, compared to those who have two children are less likely to be employed. This holds even in the longer-term, once all children have reached primary school age. An extension note also suggests that this result is externally valid. Essay 3 examines the factors that are associated with a higher hazard of exit from welfare for Australian mothers after they separate. It distinguishes the type of welfare exit that is due to finding a new partner from increasing personal income while remaining single by estimating a competing risk model. Following around 78,000 mothers and using administrative data, we find a convergence in the welfare receipt rates of well-off and poor mothers after separation, which is then slowly unwound as more advantaged mothers leave welfare at a faster rate. Different characteristics are associated with exiting welfare due to finding a new partner versus exiting welfare while remaining single.