On mandatory activation of welfare receivers

Matz Dahlberg (), Kajsa Johansson () and Eva Mörk ()
Additional contact information
Matz Dahlberg: Department of Economics, Postal: Uppsala University, P.O. Box 513, SE-751 20 Uppsala, Sweden
Kajsa Johansson: Department of Economics, Postal: Uppsala University, P.O. Box 513, SE-751 20 Uppsala, Sweden

No 2008:13, Working Paper Series from Uppsala University, Department of Economics

Abstract: This paper investigates whether mandatory activation programs for welfare receivers have effects on welfare participation, employment and disposable income. In contrast to earlier studies we are able to capture both entry and exit effects. The empirical analysis makes use of a Swedish welfare reform in which the city districts in Stockholm gradually implemented mandatory activation programs for individuals on welfare. The reform is well suited for investigating effects of such programs for several reasons. First, the reform was not combined with any other policy instruments, like time limits or tax credits, making sure that we will capture effects of mandatory activation policies and nothing else. Second, the reform was initiated at different points of time in different city districts, which ease identification. Third, using data from city districts within a single local labor market we can control for confounding macro economic shocks. Overall, we find that mandatory activation of welfare receivers reduce overall welfare participation and increases employment. We also find that mandatory activation programs appear to work best for young people and for people born in non-Western countries. For disposable income, we do not find a statistically significant effect.

Keywords: Welfare reform; Mandatory activation programs; Welfare participation; Employment; Difference-in-differences (search for similar items in EconPapers)
JEL-codes: H31 I38 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-lab
Date: 2008-11-05
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Working Paper: On mandatory activation of welfare receivers (2008)
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