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We examine the impact of two changes to Australia’s Parenting Payment Single (PPS) program, a welfare payment for low-income single mothers. One change lowered the age of youngest child cut off for program eligibility, forcing new welfare entrants onto the less generous Newstart (unemployment) payment. A second change increased job search requirements for those on PPS. We use a difference-in-difference strategy which exploits the rule changes combined with an unannounced end to grandfathering provisions to disentangle the two effects. We find little effect of the increased job search requirements. The decreased generosity of the program does not change the overall share of single mothers in employment. However, it produces a large decrease in the share of single mothers who rely on a combination of welfare and employment. Between 31.1 and 36.1 per cent of single mothers who ever received PPS between 2011 and 2016 eliminated their use of welfare. On average, likely due to the decreased generosity of the welfare payments, single mothers had lower incomes after the policy changes.

Kristen Sobeck is a Research Fellow at the Tax and Transfer Policy Institute (TTPI). Kristen studied economics and French at Smith College and has a Master’s degree in Economics from the University of Geneva. Prior to joining TTPI, she worked as an economist at the International Labour Organization (ILO) from its headquarters in Geneva and country office in Argentina. She was also awarded a Fulbright Fellowship in 2007 and is fluent in English, Spanish, and French.

Co-author: Robert Breunig