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Social employment of welfare recipients in Belgium: an evaluation

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  • Cockx, Bart

    (UNIVERSITE CATHOLIQUE DE LOUVAIN, Institut de Recherches Economiques et Sociales (IRES))

  • Ridder, Geert

    (Vrije Universiteit, Amsterdam)

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.

Suggested Citation

  • Cockx, Bart & Ridder, Geert, 1996. "Social employment of welfare recipients in Belgium: an evaluation," Discussion Papers (IRES - Institut de Recherches Economiques et Sociales) 1996018, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
  • Handle: RePEc:ctl:louvir:1996018
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    References listed on IDEAS

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    2. Robert J. LaLonde, 1984. "Evaluating the Econometric Evaluations of Training Programs with Experimental Data," Working Papers 563, Princeton University, Department of Economics, Industrial Relations Section..
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    Cited by:

    1. Gerard J. van den Berg & Bas van der Klaauw & Jan C. van Ours, 2004. "Punitive Sanctions and the Transition Rate from Welfare to Work," Journal of Labor Economics, University of Chicago Press, vol. 22(1), pages 211-241, January.
    2. repec:eee:labeco:v:47:y:2017:i:c:p:182-201 is not listed on IDEAS
    3. Bart COCKX & Muriel DEJEMEPPE, 2010. "The Threat of Monitoring Job Search. A Discontinuity Design," Discussion Papers (IRES - Institut de Recherches Economiques et Sociales) 2010041, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
    4. Bergemann, Annette & Pohlan, Laura & Uhlendorff, Arne, 2017. "The impact of participation in job creation schemes in turbulent times," Labour Economics, Elsevier, pages 182-201.
    5. 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., pages 1-23.
    6. Stéphane Rottier & Francis Bloch, 2002. "Agenda control in coalition formation," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, pages 769-788.
    7. 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, pages 189-229.
    8. Jan Eeckhout & Roberto Pinheiro & Kurt Schmidheiny, 2014. "Spatial Sorting," Journal of Political Economy, University of Chicago Press, vol. 122(3), pages 554-620.
    9. 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, May.
    10. 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 and Labor Policy and Technical Notes 29142, The World Bank.
    11. Cockx, Bart & Bardoulat, Isabelle, 1999. "Vocational Training: Does it speed up the Transition Rate out of Unemployment ?," Discussion Papers (IRES - Institut de Recherches Economiques et Sociales) 1999032, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
    12. Eichler, Martin & Lechner, Michael, 2002. "An evaluation of public employment programmes in the East German State of Sachsen-Anhalt," Labour Economics, Elsevier, pages 143-186.
    13. 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.
    14. Eichler, Martin & Lechner, Michael, 2002. "An evaluation of public employment programmes in the East German State of Sachsen-Anhalt," Labour Economics, Elsevier, pages 143-186.
    15. 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.
    16. 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).
    17. 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.
    18. Cockx, Bart & Brasseur, Carine, 2003. "The demand for physician services: Evidence from a natural experiment," Journal of Health Economics, Elsevier, pages 881-913.

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    Keywords

    Welfare; evaluation; duration data; grouping;

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