Labour market incentives among Indigenous Australians: the cost of job loss versus the gains from employment

Policy makers will be in a better position to facilitate the transition from welfare to work if they have a detailed understanding of the incentives facing the potential Indigenous workforce. Distinguishing the expected gains from becoming employed (captured by the replacement rate) from the expected loss of becoming unemployed (estimated in cost of job loss) is a prerequisite for developing a policy framework which ensures that more Indigenous workers have an incentive to look for, secure and keep jobs. This paper uses the 1994 National Aboriginal and Torres Strait Islander Survey data to analyse the issues involved.