The Effects of an Employment Bonus for Long-Term Social Assistance Recipients
This study uses a regression discontinuity design to estimate effects of an employment bonus program for long-term unemployed social assistance recipients. The program pays benefit bonuses to persons in the target group for any hours they work in regular employment or subsidized employment schemes. The program pays up to 6 % of post-tax earnings if they enter regular or subsidized employment over a specific two-year period. Our results show that the program has no effects on employment rates, earnings or participation in subsidized employment. The null findings are robust when using RD estimates based on different bandwidths and different window widths around the eligibility threshold and hold for given gender, age, ethnicity and parental status.
KeywordsEmployment bonus Economic incentive Long-term unemployment Welfare recipient Regression discontinuity
JEL ClassificationJ22 J64 J68 C21
The study builds on an evaluation conducted for the Danish Agency for Labour Market and Recruitment by the authors while they were both employed at the Danish Institute for Local and Regional Government Research (KORA). All errors and conclusions are the responsibility of the authors alone. The paper has benefited greatly from constructive comments from three anonymous referees, from the editor of the journal and from participants at a seminar the Danish Institute for Local and Regional Government Research and at a research workshop held by the Danish Ministry of Employment.
Compliance with Ethical Standards
Conflict of Interest
The authors declare that they have no conflict of interest.
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