Abstract
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.
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Notes
In the current Danish context, long-term unemployment is defined as at least 47 weeks of unemployment within a year.
Social assistance during the period corresponds to roughly USD 1570 per month pre-tax for individuals aged 25 with children, and to USD 1180 for individuals aged 25 without children (Act 946 2009). Minimum wage levels are set by collective agreements and vary across industries. The average negotiated minimum wage is approximately USD 18.5 (2012 levels). Full-time employment is 37 h per week and therefore pays approximately USD 2950 at an average hourly minimum wage.
We would have preferred to look at mothers with small children, but the sample was too small for this.
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Acknowledgements
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.
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Arendt, J.N., Kolodziejczyk, C. The Effects of an Employment Bonus for Long-Term Social Assistance Recipients. J Labor Res 40, 412–427 (2019). https://doi.org/10.1007/s12122-019-09290-3
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DOI: https://doi.org/10.1007/s12122-019-09290-3