Essays on Welfare Dependency and the Privatization of Welfare Services

Abstract: Essay 1: This paper investigates whether mandatory activation programs for welfare recipients 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. On average, we find that mandatory activation of welfare recipients increases employment as well as disposable income. However, these sizes of the estimated effects must be considered relatively small. There are some indications of larger effects for single-headed households.Essay 2: This study tests whether individuals who grow up with parents on welfare benefits are themselves more (or less) likely to be welfare recipients as young adults, compared to individuals who grow up in non-welfare households. We use the sibling difference method to identify causal effects separately from the effects of correlated factors. While a descriptive analysis reveals a fairly high positive intergenerational correlation, especially in the late teens and conditional on a large set of household level factors, the sibling analysis provides no support for a causal effect of parents’ welfare benefit receipt on children’s future welfare use.Essay 3: Spending on health care makes up a large proportion of the GDP in Sweden as in most developed countries. The introduction of private alternatives and more competition in the market have been advanced as a way to increase efficiency and patient choice, but the previous literature contain conflicting evidence regarding the quality impact of market reforms in health care. This paper examines the impact on health care quality of reforms aimed at introducing more competition in the market for primary health care. The analysis is performed using cross-county variation in private supply and the financial incentives provided by the health care organization in Sweden 1998 to 2010. The analysis separates between measures of quality which are easily observed by patients and measures intended to capture medical quality, which are more difficult for patients to assess. The results indicate that the reforms intended to increase competition do not seem to improve the overall quality of primary health care. Increased competition in the market is associated with more visits to the primary health care, but otherwise, the results give no support for effects on availability or patient satisfaction. The results on clinical quality do not indicate any consistent evidence of any impact of competition either.Essay 4: This paper investigates differences in worker absence between privately and publicly employed workers in Swedish primary schools and preschools. Using hive-offs, i.e., ownership changes from a public to a private owner, I analyze the effects of private versus public employment on sickness absence, parental leave, and temporary leave for care of children. The empirical analysis suggests a substantial negative effect on sickness absence in preschools, but not in primary schools. For parental leave and temporary parental leave for care of children, no significant effects are found in either industry. The fact that parental leave, which is voluntary to a greater extent than sickness absence, seems to be unaffected by ownership opposes the argument of stronger incentives for effort in the private sector. However, the finding of a negative effect on sickness absence suggests that private employment may be associated with better work conditions, at least for workers in the preschool sector.