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Evaluation of the Finnish Income Disregard Reform

Heikki Palviainen
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Heikki Palviainen: Faculty of Management, University of Tampere

No 1819, Working Papers from University of Tampere, School of Management, Economics

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.

Keywords: Difference-in-differences matching; making work pay; earnings disregard; welfare (search for similar items in EconPapers)
JEL-codes: C93 H53 I38 J68 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-eur, nep-lab and nep-pbe
Date: 2018-02
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