The impact of mutual obligation activities on mature age NSA recipients : a program evaluation

Abstract

Australia joined the other OECD countries in employing active labour market policies (ALMPs) in the early 1990s,when labour force participation rates, especially of mature age men, continued to fall and unemployment benefit continued to rise. While there is consensus in the literature regarding the negative association between social security benefits and labour force participation, the empirical findings to date are limited to linking aggregate trends as appropriate individual-level data were not available then. Nevertheless, the government continues to use ALMPs despite inconclusive empirical evidence. In July 2002,the coverage of the Mutual Obligation was increased to include mature age NSA recipients aged 35 to 49. The Welfare Reform Task Force hailed MO as the key to addressing social and economic disadvantage of job seekers. Participation in community service, training or part-time work are supposed to enable NSA recipients to exit NSA and work. In the thesis, the effectiveness of MO in facilitating exits from NSA is assessed applying program evaluation methods. The longitudinal administrative dataset is used to represent the individual’s workforce participation decision-making by taking into account his/her time-use preference, participation barriers and expected labour demand. It is found that MO is not effective in the way the previous government envisioned it to be. MO is more of a policy-tightening exercise than an active labour market policy aimed at enhancing the skills of the mature age NSA recipients. Only 2.2 per cent of mature age NSA entrants manifested the behavioural change the government intended – take up an MO activity, complete it and leave income support to work. This raises questions on the cost-effectiveness of MO as an ALMP given the expenditure on the program.

Date of Award	2008
Original language	English
Supervisor	Ann Harding (Supervisor), Bob Gregory (Supervisor) & Linc Thurecht (Supervisor)