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Social employment of welfare recipients in Belgium: an evaluation

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Author Info
Cockx, Bart () (UNIVERSITE CATHOLIQUE DE LOUVAIN, Institut de Recherches Economiques et Sociales (IRES))
Ridder, Geert (Vrije Universiteit, Amsterdam)

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Abstract

In Belgium welfare agencies are subsidized to employ welfare recipients for a period sufficiently long to entitle them to benefits of the contributory social insurance program. This type of employment is called Social Employment (SE). This paper investigates the effect of SE on the exit rate from welfare. We extend the minimum chi-square approach of Cockx (1995) for grouped duration data to deal with selection into SE at any instant during the welfare spell. Moreover, we introduce a specification error as in Amemiya and Nold (1975) to account for omitted variables, which may be correlated with the selection into SE. We show that a variable that is not correlated with the omitted variables, but affects the probability of selection into SE identifies the SE-effect, and we propose a consistent estimator of this effect that is free of selection bias. We argue that region is such a variable, because in Belgium regional governments determine the subsidy for SE, which affects the participation rate in SE by some political process without consideration of the average characteristics of the welfare recipients in their region. The empirical analysis discovers creaming in the selection process. Without correction for selectivity we find that SE reduces welfare dependency. After correction this conclusion is reversed. These results are in line with the incentives faced by the welfare agencies, that administer the program.

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Paper provided by Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES) in its series Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES) Discussion Paper with number 1996018.

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Length: 28
Date of creation: 00 Jul 1996
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Handle: RePEc:ctl:louvir:1996018

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Keywords: Welfare evaluation duration data grouping

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Ridder, G, 1986. "An Event History Approach to the Evaluation of Training, Recruitment and Employment Programmes," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 1(2), pages 109-26, April. [Downloadable!] (restricted)
  2. Moffitt, Robert, 1992. "Incentive Effects of the U.S. Welfare System: A Review," Journal of Economic Literature, American Economic Association, vol. 30(1), pages 1-61, March. [Downloadable!] (restricted)
  3. Gueron, Judith M, 1990. "Work and Welfare: Lessons on Employment Programs," Journal of Economic Perspectives, American Economic Association, vol. 4(1), pages 79-98, Winter. [Downloadable!] (restricted)
  4. Cockx, Bart, 1990. "The Analysis of Transition Data by the Minimum Chi-Square Method. An Application to Welfare Spells in Belgium," Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES) Discussion Paper 1995008, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES), revised 00 Mar 1995.
  5. Angrist, Joshua D & Krueger, Alan B, 1991. "Does Compulsory School Attendance Affect Schooling and Earnings?," The Quarterly Journal of Economics, MIT Press, vol. 106(4), pages 979-1014, November. [Downloadable!] (restricted)
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  6. James J. Heckman, 1991. "Randomization and Social Policy Evaluation," NBER Technical Working Papers 0107, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  7. Bruce D. Meyer & W. Kip Viscusi & David L. Durbin, 1990. "Workers' Compensation and Injury Duration: Evidence from a Natural Experiment," NBER Working Papers 3494, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  8. LaLonde, Robert J, 1986. "Evaluating the Econometric Evaluations of Training Programs with Experimental Data," American Economic Review, American Economic Association, vol. 76(4), pages 604-20, September. [Downloadable!] (restricted)
  9. Alan Krueger, 1990. "Worker's Compensation Insurance and the Duration of Workplace Injuries," Working Papers 641, Princeton University, Department of Economics, Industrial Relations Section.. [Downloadable!]
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  10. repec:fth:prinin:261 is not listed on IDEAS
  11. Imbens, G. & Van Der Klaauw, W., 1993. "Evaluating the Cost of Conscription in the Netherlands," Harvard Institute of Economic Research Working Papers 1632, Harvard - Institute of Economic Research.
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  12. Imbens, Guido W & Angrist, Joshua D, 1994. "Identification and Estimation of Local Average Treatment Effects," Econometrica, Econometric Society, vol. 62(2), pages 467-75, March. [Downloadable!] (restricted)
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  13. Meyer, Bruce D, 1995. "Natural and Quasi-experiments in Economics," Journal of Business & Economic Statistics, American Statistical Association, vol. 13(2), pages 151-61, April.
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  14. Joshua D. Angrist, 1993. "The effect of veterans' benefits on education and earnings," Industrial and Labor Relations Review, ILR Review, ILR School, Cornell University, vol. 46(4), pages 637-652, July.
  15. Card, David & Krueger, Alan B, 1994. "Minimum Wages and Employment: A Case Study of the Fast-Food Industry in New Jersey and Pennsylvania," American Economic Review, American Economic Association, vol. 84(4), pages 772-93, September. [Downloadable!] (restricted)
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  16. Bruce D. Meyer, 1989. "A Quasi-Experimental Approach to the Effects of Unemployment Insurance," NBER Working Papers 3159, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Michael Lechner & Martin Eichler, 1999. "An Evaluation of Public Employment Programmes in the East German State of Sachsen-Anhalt," IZA Discussion Papers 94, Institute for the Study of Labor (IZA). [Downloadable!]
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  2. Gerard J. van den Berg & Bas van der Klaauw & Jan C. van Ours, 1998. "Punitive Sanctions and the Transition Rate from Welfare to Work," Tinbergen Institute Discussion Papers 98-076/3, Tinbergen Institute. [Downloadable!]
    Other versions:
  3. Bart Cockx & Isabelle Bardoulat, 2000. "Vocational Training: Does it speed up the Transition Rate out of Unemployment?," Tinbergen Institute Discussion Papers 00-016/3, Tinbergen Institute. [Downloadable!]
    Other versions:
  4. Hagen, Tobias, 2003. "Three Approaches to the Evaluation of Active Labour Market Policy in East Germany Using Regional Data," ZEW Discussion Papers 03-27, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research. [Downloadable!]
  5. Bart COCKX & Carine BRASSEUR, 2001. "The Demand for Physician Services. Evidence from a Natural Experiment," Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES) Discussion Paper 2001027, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES). [Downloadable!]
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  6. Muriel Dejemeppe & Bart Cockx, 2005. "Duration dependence in the exit rate out of unemployment in Belgium. Is it true or spurious?," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 20(1), pages 1-23. [Downloadable!]
    Other versions:
  7. Cockx, Bart, 1999. "The Design of Active Labour Market Policies. What Matters and What Doesn't ?," Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES) Discussion Paper 1999035, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES). [Downloadable!]
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