The Influence of Psychological Well-being, Ill Health and Health Shocks on Single Parents' Labour Supply

Alan Duncan, Mark Harris, Anthony Harris and Eugenio Zucchelli

No WP1307, Bankwest Curtin Economics Centre Working Paper series from Bankwest Curtin Economics Centre (BCEC), Curtin Business School

Abstract: This paper proposes a discrete-choice behavioural model of labour supply to examine the role of ill-health on single parents’ employment. The model provides estimates of individual preferences over a given set of labour market states and allows these preferences to be influenced by a measure of mental health, a latent health index purged of reporting bias and various measures of health shocks. Exploiting longitudinal data from the HILDA Survey, we find that psychological well-being, ill-health and health shocks significantly influence single parents’ marginal disutility of work and marginal utility of income. Further, we apply behavioural microsimulation methods to estimate the likely labour supply responses among single parents in Australia from restricting eligibility to access disability support via the Australian Disability Support Pension (DSP) scheme. Our simulation exercise reveals that imposing tighter DSP eligibility rules has a moderate but positive effect on single mothers’ employment.

Keywords: health; disability; wellbeing; health shocks; discrete choice; behavioural microsimulation; labour supply (search for similar items in EconPapers)
JEL-codes: C10 C25 C51 I10 I19 J01 (search for similar items in EconPapers)
Pages: 31 pages
Date: 2013-07
New Economics Papers: this item is included in nep-dcm, nep-hap, nep-hea, nep-lab and nep-upt
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