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Evaluation of the Finnish Income Disregard Reform

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  • Palviainen Heikki

    (Faculty of Management, University of Tampere)

Abstract

In 2002, the Finnish government introduced an earnings disregard reform aimed at improving the incentives of low-income individuals who receive last-resort social assistance. The aim of the reform was to decrease unemployment by providing social assistance clients better incentives to receive at least temporary or part-time work. This paper evaluates the employment effects of the reform using a quasi-experimental design. After a behavioral adjustment period, there are positive results for females, single-person households and individuals with earnings. No effects on the extensive margin imply that a behavioural response requires some attachment to the labour market. No transition from social assistance to longer-term employment is observed.

Suggested Citation

  • Palviainen Heikki, 2018. "Evaluation of the Finnish Income Disregard Reform," Working Papers 1819, Tampere University, Faculty of Management and Business, Economics.
    • Handle: RePEc:tam:wpaper:1819
    as

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    File URL: http://urn.fi/URN:ISBN:978-952-03-0697-7
    File Function: First version, 2018
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    Difference-in-differences matching; making work pay; earnings disregard; welfare;
    All these keywords.

    JEL classification:

    • C93 - Mathematical and Quantitative Methods - - Design of Experiments - - - Field Experiments
    • H53 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Welfare Programs
    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs
    • J68 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Public Policy

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