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Of carrots and sticks: the effect of workfare announcements on the job search behaviour and reservation wage of welfare recipients

Katrin Hohmeyer () and Joachim Wolff ()
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Katrin Hohmeyer: Institute for Employment Research
Joachim Wolff: Institute for Employment Research

Journal for Labour Market Research, 2018, vol. 52, issue 1, 1-23

Abstract: Abstract The German workfare scheme ‘One-Euro-Jobs’, which provides additional jobs of public interest for welfare recipients, has a number of different goals. On the one hand, One-Euro-Jobs are intended to increase the participants’ employment prospects in the medium term. On the other hand, they can be used to test welfare recipients’ willingness to work. We use survey data from the Panel Study ‘Labour Market and Social Security’ and propensity score matching methods to study the intention-to-treat effect of receiving a One-Euro-Job announcement on job search behaviour, reservation wage and labour market performance of welfare recipients. We find that receiving a One-Euro-Job announcement increases job search activities significantly and decreases the reservation wage for women and individuals who have been employed within the last 4 years, but does not affect the short-term employment probability.

Keywords: Activation; Employment; Intention-to-treat effect; Job search; Threat effect; Attraction effect; Propensity score matching; Welfare receipt; Workfare (search for similar items in EconPapers)
JEL-codes: I38 J64 J68 (search for similar items in EconPapers)
Date: 2018
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