| Abstract: | Australia's income support arrangements have come under increasing scrutiny lately reflecting a growing concern about high levels of youth unemployment and about low levels of full-time education participation. This paper aims to explore the relationship between education participation and financial incentives and to assess as a possible direction for future reform, the concept of a single and universal youth allowance. The paper begins by outlining the major forms of income support available to young people and illustrates some of the complexities in the youth income support structure. The evidence on the importance of financial factors conflicts, particularly between economists and non-economists. This is in part explained by the different conceptual frameworks used. Other possible reasons are canvassed as to why studies have so far not thrown much light on the role of financial factors in the education participation decision. The paper also outlines specific directions of distortion contained in current payment relativities. Several difficulties with the proposal for a single youth allowance as a means of increasing education participation are discussed and alternatives briefly outlined. The concluding section of the paper summarises the issues relevant to the future debate on youth income support and identifies areas for further research. |
