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Workfare for the old and long-term unemployed

  • Bennmarker, Helge
  • Skans, Oskar Nordström
  • Vikman, Ulrika

We estimate the effects of conditioning benefits on program participation among older long-term unemployed workers. We exploit a Swedish reform which reduced UI duration from 90 to 60weeks for a group of older unemployed workers in a setting where workers who exhausted their benefits received unchanged transfers if they agreed to participate in a work practice program. Our results show that job finding increased as a result of the shorter duration of passive benefits. The time profile of the job-finding effects suggests that the results are due to deterrence during the program-entry phase. We find no impact on ensuing job durations or wages, suggesting that the increased job-finding rate was driven by increased search intensity rather than lower reservation wages. A crude cost–benefit analysis suggests that the reform reduced the combined cost of programs and transfers.

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Article provided by Elsevier in its journal Labour Economics.

Volume (Year): 25 (2013)
Issue (Month): C ()
Pages: 25-34

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Handle: RePEc:eee:labeco:v:25:y:2013:i:c:p:25-34
Contact details of provider: Web page: http://www.elsevier.com/locate/labeco

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