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Social Employment of Welfare Recipients in Belgium: An Evaluation

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  • Geert Ridder
  • Bart Cockx

Abstract

In Belgium welfare agencies receive a subsidy to employ welfare recipients for a period sufficiently long to entitle them to benefits of the contributory social insurance program This work experience program without any training content is called Social Employment (SE) This paper investigates the effect of SE on the exit rate from welfare We argue that the funding of the program induces exogenous variation in the SE-participation rates between regions We propose a grouping/IV estimator of the SE effect that exploits this variation The estimator is consistent even if the selection into SE depends on the average unobserved characteristics of welfare recipients in a region and with the welfare spell of a specific length The empirical analysis shows that there is creaming in the selaction 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 diagnosis of the causes of unemployment persistence in Belgium and with the incentives faced by the welfare agencies that administer the program

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Bibliographic Info

Paper provided by The Johns Hopkins University,Department of Economics in its series Economics Working Paper Archive with number 415.

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Date of creation: Mar 1999
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Handle: RePEc:jhu:papers:415

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References

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  1. 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.
  2. David Card & Alan B. Krueger, 1993. "Minimum Wages and Employment: A Case Study of the Fast Food Industry in New Jersey and Pennsylvania," NBER Working Papers 4509, National Bureau of Economic Research, Inc.
  3. Joshua D. Angrist, 1993. "The effect of veterans' benefits on education and earnings," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 46(4), pages 637-652, July.
  4. Stephen H. Bell & Larry L. Orr, 1994. "Is Subsidized Employment Cost Effective for Welfare Recipients? Experimental Evidence from Seven State Demonstrations," Journal of Human Resources, University of Wisconsin Press, vol. 29(1), pages 42-61.
  5. Joshua D. Angrist & Alan B. Krueger, 1990. "Does Compulsory School Attendance Affect Schooling and Earnings?," NBER Working Papers 3572, National Bureau of Economic Research, Inc.
  6. Gary Burtless & Larry L. Orr, 1986. "Are Classical Experiments Needed for Manpower Policy," Journal of Human Resources, University of Wisconsin Press, vol. 21(4), pages 606-639.
  7. 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.
  8. 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.
  9. 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.
  10. James J. Heckman, 1991. "Randomization and Social Policy Evaluation," NBER Technical Working Papers 0107, National Bureau of Economic Research, Inc.
  11. Joshua D. Angrist & Guido W. Imbens, 1995. "Identification and Estimation of Local Average Treatment Effects," NBER Technical Working Papers 0118, National Bureau of Economic Research, Inc.
  12. Cockx, Bart, 1990. "The Analysis of Transition Data by the Minimum Chi-Square Method. An Application to Welfare Spells in Belgium," Discussion Papers (IRES - Institut de Recherches Economiques et Sociales) 1995008, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES), revised 00 Mar 1995.
  13. Joshua Angrist, 1989. "Lifetime Earnings and the Vietnam Era Draft Lottery: Evidence from Social Security Administrative Records," Working Papers 631, Princeton University, Department of Economics, Industrial Relations Section..
  14. Alan Krueger, 1990. "Worker's Compensation Insurance and the Duration of Workplace Injuries," Working Papers 641, Princeton University, Department of Economics, Industrial Relations Section..
  15. 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.
  16. 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.
  17. Bruce D. Meyer, 1989. "A Quasi-Experimental Approach to the Effects of Unemployment Insurance," NBER Working Papers 3159, National Bureau of Economic Research, Inc.
  18. Parks, Richard W., 1980. "On the estimation of multinomial logit models from relative frequency data," Journal of Econometrics, Elsevier, vol. 13(3), pages 293-303, August.
  19. repec:fth:prinin:261 is not listed on IDEAS
  20. 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.
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Citations

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Cited by:
  1. 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.
  2. B. Cockx & M. Dejemeppe, 2010. "The Threat of Monitoring Job Search. A Discontinuity Design," Working Papers of Faculty of Economics and Business Administration, Ghent University, Belgium 10/685, Ghent University, Faculty of Economics and Business Administration.
  3. Bart Cockx & Christian Goebel & Stéphane Robin, 2013. "Can income support for part-time workers serve as a stepping-stone to regular jobs? An application to young long-term unemployed women," Empirical Economics, Springer, vol. 44(1), pages 189-229, February.
  4. Cockx, Bart, 1999. "The Design of Active Labour Market Policies. What Matters and What Doesn't ?," Discussion Papers (IRES - Institut de Recherches Economiques et Sociales) 1999035, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
  5. Muriel Dejemeppe & Bruno Van der Linden & Andrey Launov & Bart Cockx, 2011. "Monitoring and Sanctions in a Non-Stationary Structural Job-Search Model," 2011 Meeting Papers 501, Society for Economic Dynamics.
  6. Bart COCKX & Carine BRASSEUR, 2001. "The Demand for Physician Services. Evidence from a Natural Experiment," Discussion Papers (IRES - Institut de Recherches Economiques et Sociales) 2001027, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
  7. Eichler, Martin & Lechner, Michael, 2002. "An evaluation of public employment programmes in the East German State of Sachsen-Anhalt," Labour Economics, Elsevier, vol. 9(2), pages 143-186, April.
  8. 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.
  9. 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.
  10. 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.
  11. Betcherman, Gordon & Olivas, Karina & Dar, Amit, 2004. "Impacts of active labor market programs : new evidence from evaluations with particular attention to developing and transition countries," Social Protection Discussion Papers 29142, The World Bank.
  12. Viktor Steiner & Tobias Hagen, 2002. "Was kann die Aktive Arbeitsmarktpolitik in Deutschland aus der Evaluationsforschung in anderen europäischen Ländern lernen?," Perspektiven der Wirtschaftspolitik, Verein für Socialpolitik, vol. 3(2), pages 189-206, 05.
  13. Michael White and Genevieve Knight, 2003. "Benchmarking the effectiveness of NDYP: A review of European and US literature on the microeconomic effects of labour market programmes for young people," PSI Research Discussion Series 10, Policy Studies Institute, UK.
  14. Berg, G. van den & Klaauw, B. van der & Ours, J.C. van, 1998. "Punitive sanctions and the transition from welfare to work," Discussion Paper 1998-56, Tilburg University, Center for Economic Research.

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