The labour supply of Indigenous Australian females: the effects of fertility and interactions with the justice system

Abstract

Indigenous females are among the most disadvantaged groups in Australia; Furthermore outcomes for Indigenous Australians compare unfavourably with those for similar First Nations around the world. There appears to be a demographic transition under way in Indigenous Australia whereby declines in fertility and mortality are likely to lead to an increase in the number of Indigenous people supplying their labour in the near future. This paper examines the determinants of Indigenous female labour force participation with a particular focus on the role of fertility and interaction with the justice system. The analysis controls for the standard determinants of labour supply, but its main contribution is in taking into account the endogeneity of these potential interruptions to labour market participation. These findings are also important because Indigenous Australian females are 22 times more likely to be in prison than other Australian females and hence the analysis has crucial implications for the ability of policy makers to ‘close the gaps’ between Indigenous and other Australians. Once endogeneity of fertility with labour supply is taken into account, there is no significant independent effect on labour force participation and hence policy should focus on the other factors including education and training.