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Dynamic effects of mandatory activation of welfare participants

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Author Info

  • Persson, Anna

    ()
    (Uppsala Center for Fiscal Studies)

  • Vikman, Ulrika

    ()
    (Uppsala Center for Fiscal Studies)

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    Abstract

    Previous literature shows that activation requirements for welfare participants decrease welfare participation. However, the dynamics have not been examined, and often only exit effects are analyzed. In this paper, we look more closely at the transition rates into and out of welfare. Using register data on the entire population of Stockholm, we are able to capture how both entry and exit rates were affected when activation requirements were introduced at different times in Stockholm’s city districts. The results indicate that the main reduction in welfare participation is due to a small increase in exit rates. The part of the population that is at risk of entering into welfare, though, experiences a reduction in entry rates due to the reform. There are also heterogeneous effects, namely, large effects on entry rates for young individuals. In addition, there are larger effects on exit rates for unmarried individuals without children compared to the population as a whole.

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    File URL: http://ucfs.nek.uu.se/digitalAssets/129/129566_wp20105.pdf
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    Bibliographic Info

    Paper provided by Uppsala University, Department of Economics in its series Working Paper Series, Center for Fiscal Studies with number 2010:5.

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    Length: 37 pages
    Date of creation: 16 Jun 2010
    Date of revision:
    Handle: RePEc:hhs:uufswp:2010_005

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    Postal: Department of Economics, Uppsala University, P. O. Box 513, SE-751 20 Uppsala, Sweden
    Phone: + 46 18 471 25 00
    Fax: + 46 18 471 14 78
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    Web page: http://www.nek.uu.se/
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    Related research

    Keywords: Welfare reform; mandatory activation program; welfare entry; welfare exit;

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    1. Van den Berg, Gerard J., 2001. "Duration models: specification, identification and multiple durations," Handbook of Econometrics, in: J.J. Heckman & E.E. Leamer (ed.), Handbook of Econometrics, edition 1, volume 5, chapter 55, pages 3381-3460 Elsevier.
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