Does Part-Time Employment Help or Hinder Lone Mothers Movements into Full-Time Employment?

A significant demographic trend in recent decades in Australia has been the growth in lone parent families as a proportion of all families, associated with which has been growth in welfare dependency. This has led to considerable policy focus on increasing lone parent participation in employment. A key issue that has arisen for the Government in pursuing this policy goal is whether, in the context of a welfare system that accommodates the combining of part-time employment with welfare receipt, part-time employment helps or hinders a progression to full-time employment, and whether and how this depends on characteristics such as the number and ages of dependent children. In this study, we investigate this issue using Australian panel data on female lone parents over the period 2001 to 2007. We estimate dynamic random effects multinomial logit models of three labour force states – not employed, employed part-time, and employed full-time – allowing investigation of whether part-time work represents a stepping stone to full-time employment. Evidence in support of the stepping stone hypothesis is found. Part-time employment increases the probability of full-time employment in the next year by approximately six percentage points. No (statistically significant) evidence is found that this stepping stone function varies by number of children or age of the youngest child.