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USING BUDGET CONSTRAINTS TO ILLUSTRATE POVERTY TRAPS: THE CASE OF YOUNG PART‐TIME WORKERS IN AUSTRALIA
Author(s) -
Dollery Brian,
Fletcher Michael
Publication year - 1997
Publication title -
australian journal of social issues
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.417
H-Index - 30
eISSN - 1839-4655
pISSN - 0157-6321
DOI - 10.1002/j.1839-4655.1997.tb01060.x
Subject(s) - unemployment , poverty , project commissioning , social security , economics , publishing , labour economics , poverty trap , wage , demographic economics , youth unemployment , economic growth , political science , market economy , law
Although much is known about the incidence of unemployment in Australia over the recent past, the causes of unemployment remain controversial. Various explanations have been advanced, some of which focus on the unemployment benefits system. The present study examines the problem of high effective marginal tax rates faced by young social security recipients wishing to engage in part‐time employment, and the resultant emergence of so‐called ‘poverty traps’. We examine budget constraints for unemployed eighteen year olds, both singles and couples, for part‐time employment in four low income occupations; namely, brickie's labourer, public service clerk, stationhand and sales assistant. The results indicate that pervasive disincentive effects exist for young people seeking low wage employment.