Almost one in five lone parents are better off not working due to the cost of childcare, according to the ESRI.
New research shows those who took up work after a social welfare policy change 2011 actually suffered a fall in income rather than a rise.
The report puts this down to high childcare costs and low-paid, part-time employment options.
Senior Research Officer, Dr Claire Keane, says the price of child-minders and creches is a huge factor.
Dr Keane said: "We have extremely high childcare costs compared to other OECD countries.
"So if we look and see how many lone parents are better off not working before we take these childcare costs into account, it's around 2%.
"If we move to include childcare costs, 60% of lone parents are financially better off not being in employment."
