Fostering of Dependency or Protection? Social Assistance Programs and Work Incentives

The paper introduces the methods of assessing the effects of social assistance on work incentives, using representative Rosstat survey data as illustration. It also demonstrates the key steps of testing the hypothesis of the social benefits effect on work incentives, as well as the need for conducting multi-factor analysis coupled with impact evaluation methods. The key finding from descriptive analysis is that an average household that has recipients of social benefits among its members cannot rely on social benefits as a significant source of means of subsistence, therefore social transfers do not produce a sizeable effect on work behavior. Nevertheless, the authors propose a hypothesis that there are certain groups of social transfers beneficiaries whose work behavior may be strongly affected by social transfers. Firstly, this refers to recipients of social transfers, the size of which is comparable to the anticipated wage size. In such cases, social transfers can produce a negative employment effect. Secondly, this could refer to recipients, whose eligibility to social transfers is related to their belonging to a certain professional group. In this case, in all likelihood, social transfers create economic incentives to stay in these professional groups, reducing labor mobility. The testing and analysis of these hypothesis will be presented in forthcoming papers by the authors.