Working Paper: CEPR ID: DP7924
Authors: Bas van der Klaauw; Jan C. van Ours
Abstract: To increase their transition from welfare to work, benefit recipients in the municipality of Rotterdam were exposed to various financial incentives, including both carrots to sticks. Once their benefit spell exceeded one year, welfare recipients were entitled to a reemployment bonus if they found a job that lasted at least six months. However, they could also be punished for noncompliance witheligibility requirements and face a sanction, i.e. a temporary reducing of their benefits. In this paper we investigate how benefit sanctions and reemployment bonuses affect job finding rates of welfare recipients. We find that benefit sanctions were effective in bringing unemployed from welfare to work more quickly while reemployment bonuses were not.
Keywords: difference-in-difference; dynamic selection; financial incentives; timing of events; welfare to work
JEL Codes: C21; C41; J64
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| benefit sanctions (J32) | job finding rates (J68) |
| benefit sanctions (J32) | exit rate to work (J63) |
| reemployment bonuses (J65) | job finding rates (J68) |