Further investigations into indigenous labour supply: what discourages discouraged workers?

Abstract

Indigenous people are far more likely to be discouraged from looking for work than other Australians. Understanding the microeconomic determinants of what discourages particular workers has important implications for overcoming the labour force disadvantage faced by indigenous Australians. This paper focuses on the interaction between labour supply and demand, and particularly on examining the factors that lead to indigenous people who want to work not looking for work and therefore remaining outside the workforce. A discouraged worker is defined, for the purposes of this paper, as someone that wants to work but is not actively looking for a job. Data from the 1994 National Aboriginal and Torres Strait Islander Survey is used in the analysis. <p> The conventional economic models of labour supply are somewhat unsatisfying in that they only allow a limited role for social environmental factors. The contribution of this paper is two-fold. First it extends the range of factors examined in studies of indigenous labour supply to include cultural and social environmental factors. Second it focuses on what discourages indigenous discouraged workers. <p> Cultural factors are found to be particularly important in determining indigenous labour supply. However, they are by no means the only factors affecting labour supply. Indeed, age, educational attainment and family factors are found to be more important. None-the-less, the clear message is that work which attempts to explain indigenous labour force participation needs to take account of cultural factors.