Developing Income-Contingent Loans for Women Experiencing Partner Violence in Australia

Abstract

This thesis explores the design and modelling of income-contingent loans (ICLs) to support Australian working-age women experiencing partner violence (PV). Traditionally used in higher education, ICLs offer consumption smoothing and default protection, making them a potentially transformative financial tool in new domains. Given 17% of Australian women have experienced PV (Australian Bureau of Statistics, 2023) and current financial assistance is limited, this research examines the feasibility of ICLs as a sustainable support mechanism.

The thesis comprises six chapters. Following the introduction in Chapter 1, Chapter 2 presents the rationale for an ICL to support victims of PV, justifies using a microsimulation model (MSM) to quantify ICL costs and feasibility, and details the model structure. Chapter 3 discusses the selection of the hypothetical initial population of eligible women who have experienced PV and develops a model of employment dynamics using dynamic binary regression with a logistic link. Chapter 4 employs copula-based methods to model lifetime income trajectories, capturing income dependence over time. Chapter 5 presents ICL design parameters and integrates employment and income projections into the MSM. Lifetime repayments and subsidies are estimated for a hypothetical population, with average subsidies ranging from 21% to 72%, depending on loan design. Sensitivity analyses assess the impact of key loan parameters. Finally, the study evaluates the feasibility of implementing ICLs for PV, highlighting benefits for PV affected women and costs to taxpayers. We show ICLs could provide higher financial efficiency to the government compared to grants, given fixed budgetary constraints, and discuss the potential of ICLs to alleviate financial pressure on women experiencing PV compared to traditional loans. This approach could offer immediate financial relief and pave the way for long-term recovery and empowerment for these women. Chapter 6 concludes.