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Does the unemployment benefit institution affect the productivity of workers? Evidence from a field experiment

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  • Mariana Blanco

    ()

  • Juan Fernando Vargas

    ()

  • Patricio S. Dalton

    ()

Abstract

Abstract: We investigate whether and how the type of unemployment benefi t institution a ffects productivity. We designed a eld experiment to compare workers' productivity under a welfare system, where the unemployed receive an unconditional monetary transfer, with their productivity under a workfare system, where the transfer is received conditional on the unemployed spending some time on ancillary activities. First, we find that having an unemployment benefi t institution, regardless of whether it makes transfers conditional or unconditional, increases workers' productivity. Second, we fi nd that productivity is higher under Welfare than under Workfare. Becoming unemployed under Welfare comes at the psychological cost of a drop in self-esteem, presumably due to the shame or stigma associated with receiving an unconditional unemployment benefi t. We document the empirical relevance of precisely this channel. The di fferences we observe in productivity suggest that this psychological cost acts as an extra non monetary incentive for workers under Welfare to put a higher eff ort in their work.

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Bibliographic Info

Paper provided by UNIVERSIDAD DEL ROSARIO in its series DOCUMENTOS DE TRABAJO with number 011015.

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Length: 45
Date of creation: 04 Nov 2013
Date of revision:
Handle: RePEc:col:000092:011015

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Keywords: Unemployment Bene ts; Workfare; Productivity; Self-esteem; Shame.;

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  9. Oswald, Andrew J. & Proto, Eugenio & Sgroi, Daniel, 2008. "Happiness and Productivity," The Warwick Economics Research Paper Series (TWERPS) 882, University of Warwick, Department of Economics.
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  11. Abbring, Jaap H. & Berg, Gerard J. van den & Ours, Jan C. van, 1996. "The effect of unemployment insurance sanctions on the transition rate from unemployment to employment," Serie Research Memoranda 0038, VU University Amsterdam, Faculty of Economics, Business Administration and Econometrics.
  12. Daron Acemoglu & Robert Shimer, 1999. "Productivity Gains from Unemployment Insurance," Working papers 99-29, Massachusetts Institute of Technology (MIT), Department of Economics.
  13. Fredriksson, Peter & Holmlund, Bertil, 2003. "Improving Incentives in Unemployment Insurance: A Review of Recent Research," Working Paper Series 2003:10, Uppsala University, Department of Economics.
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As found by EconAcademics.org, the blog aggregator for Economics research:
  1. Economía (y Psicología) de la Productividad Laboral y los Subsidios al Desempleo
    by Juan F Vargas in Foco Económico on 2014-04-15 21:00:45

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