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Dynamic effects of mandatory activation of welfare participants

  • Persson, Anna


    (Department of Economics)

  • Vikman, Ulrika


    (Department of Economics)

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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Paper provided by Uppsala University, Department of Economics in its series Working Paper Series with number 2010:11.

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Length: 37 pages
Date of creation: 16 Jun 2010
Date of revision:
Handle: RePEc:hhs:uunewp:2010_011
Contact details of provider: 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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  1. Jeffrey M. Wooldridge, 2003. "Cluster-Sample Methods in Applied Econometrics," American Economic Review, American Economic Association, vol. 93(2), pages 133-138, May.
  2. 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.
  3. Besley, Timothy & Coate, Stephen, 1992. "Workfare versus Welfare Incentive Arguments for Work Requirements in Poverty-Alleviation Programs," American Economic Review, American Economic Association, vol. 82(1), pages 249-61, March.
  4. Dahlberg, Matz & Johansson, Kajsa & Mörk, Eva, 2008. "On mandatory activation of welfare receivers," Working Paper Series 2008:13, Uppsala University, Department of Economics.
  5. Jonah B. Gelbach, 2004. "Migration, the Life Cycle, and State Benefits: How Low Is the Bottom?," Journal of Political Economy, University of Chicago Press, vol. 112(5), pages 1091-1130, October.
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  7. Katherine Cuff, 1998. "Optimality of Workfare with Heterogeneous Preferences," Working Papers 968, Queen's University, Department of Economics.
  8. Rebecca M. Blank, 2002. "Evaluating Welfare Reform in the United States," Journal of Economic Literature, American Economic Association, vol. 40(4), pages 1105-1166, December.
  9. Jorgen Hansen & Magnus Lofstrom, 2003. "Immigrant Assimilation and Welfare Participation Do Immigrants Assimilate Into or Out of Welfare?," Journal of Human Resources, University of Wisconsin Press, vol. 38(1).
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  11. McKinnish, Terra, 2007. "Welfare-induced migration at state borders: New evidence from micro-data," Journal of Public Economics, Elsevier, vol. 91(3-4), pages 437-450, April.
  12. Hansen, Jörgen & Lofstrom, Magnus, 2006. "Immigrant-Native Differences in Welfare Participation: The Role of Entry and Exit Rates," IZA Discussion Papers 2261, Institute for the Study of Labor (IZA).
  13. Brett, Craig, 1998. "Who Should Be on Workfare? The Use of Work Requirements as Part of an Optimal Tax Mix," Oxford Economic Papers, Oxford University Press, vol. 50(4), pages 607-22, October.
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  15. Dan A. Black & Jeffrey A. Smith & Mark C. Berger & Brett J. Noel, 2003. "Is the Threat of Reemployment Services More Effective Than the Services Themselves? Evidence from Random Assignment in the UI System," American Economic Review, American Economic Association, vol. 93(4), pages 1313-1327, September.
  16. Stephen G. Donald & Kevin Lang, 2007. "Inference with Difference-in-Differences and Other Panel Data," The Review of Economics and Statistics, MIT Press, vol. 89(2), pages 221-233, May.
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