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Compulsory activation of young welfare recipients: revisiting the trade-off between workfare and welfare generosity

Author

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  • Smedsvik, Bård
  • Iacono, Roberto

Abstract

We revisit the trade-off between workfare and welfare through a quasi-natural experiment by exploiting municipal variation from a 2017 Norwegian reform introducing compulsory activation for young welfare recipients. The results show a significant negative effect on social assistance. On the other hand, we find no effect on income adequacy, implying that other transfers mitigate the drop in social assistance. Our results convey therefore that the trade-off between workfare and welfare is binding when focusing exclusively on social assistance: investing in activation policies creates challenges to poverty alleviation channeled through the last social safety net. However, the trade-off is mitigated through other transfers, allowing us to conclude that social investment does not need to be inimical to the poor.

Suggested Citation

  • Smedsvik, Bård & Iacono, Roberto, 2025. "Compulsory activation of young welfare recipients: revisiting the trade-off between workfare and welfare generosity," LSE Research Online Documents on Economics 130149, London School of Economics and Political Science, LSE Library.
    • Handle: RePEc:ehl:lserod:130149
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    File URL: https://researchonline.lse.ac.uk/id/eprint/130149/
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    Keywords

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    JEL classification:

    • I32 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Measurement and Analysis of Poverty
    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs
    • J08 - Labor and Demographic Economics - - General - - - Labor Economics Policies

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