Reservation wages and the earnings capacity of lone and couple mothers

Reservation wages and the earnings capacity of lone and couple mothers

Are wage expectations too high?

Matthew Gray and Jennifer Renda

Research Paper No. 37 — June 2006

This paper concerns the factor of wages in attracting income support recipients into the work force. It examines whether non-employed lone and couple mothers who would like to work are able to provide an estimate of their reservation income - the minimum wage which they need to be paid in order to accept a job offer - and whether they hold unrealistically high wage expectations. The analysis is based on the Family and Work Decisions (FAWD) survey of 2,405 mothers conducted in late 2002. The survey found over two thirds of respondents were able to estimate their reservation wage, and that their estimates were largely modest and achievable.   

Authors and Acknowledgements

The analysis in this paper is based upon the results of the Family and Work Decisions survey which was undertaken by the Institute in partnership with the Australian Government Department of Families, Community Services and Indigenous Affairs. The assistance of Anne Gregory, David Hazlehurst, Louise Newey, Vic Pearse and Yvette Simms in the conduct of the survey is acknowledged. The authors thank Michael Alexander, Alan Hayes, Jody Hughes, Boyd Hunter, Guyonne Kalb, Vic Pearse, David Stanton, Yvette Simms, Prem Thapa and Ruth Weston for comments on an earlier version of this paper. The views expressed in this paper are those of the authors and may not reflect the views of the Institute or the Department of Families, Community Services and Indigenous Affairs, and cannot be taken in any way as expressions of government policy.

Publication details

Research Paper
No. 37
Published by the Australian Institute of Family Studies, June 2006.
34 pp.
ISSN: 
1446-9871
ISBN: 
0 642 39542 X
Suggested citation:

Gray, M., & Renda, J. (2006). Reservation wages and the earnings capacity of lone and couple mothers. Are wage expectations too high? ( Research Paper No. 37). Melbourne: Australian Institute of Family Studies.

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