Financial Incentives to Work for Married Mothers under A New Tax System

The introduction of A New Tax System in July 2000 included substantial changes to social security payments, including family assistance and child care subsidies. Most of these payments are income tested, so that as a family’s income increases the amount of government assistance it receives is reduced. This article analyses the impact of increasing income and child care costs on the financial incentives for women with children to increase their participation in paid work. The results show that for some families increasing the mother’s hours of work has a very small impact on the family’s disposable income. 1